24 Dec 2015
UK in 2016: Bank rate rises & Brexit risk – RBS
FXStreet (Delhi) – Research Team at RBS, suggests that the two issues will dominate the year ahead in the UK: the timing and pace of BoE Bank Rate hikes and the ‘Remain-Leave’ EU Referendum.
Key Quotes
“A high degree of uncertainty prevails. The referendum may not even occur in 2016, though the government’s preference appears to be for an early plebiscite (June), and the outcome too close to call. We forecast the first Bank Rate rise in August 2016, with the risks tilted towards a later move – we remain more dovish than the (perennially hawkish) City consensus and current MPC signalling. Downside risks stem from the £7bn fiscal hit to disposable incomes, Brexit risk postponing capex/hiring and any export-led recovery remaining elusive against a backdrop of deteriorating global trade and GBP appreciation.”
Key Quotes
“A high degree of uncertainty prevails. The referendum may not even occur in 2016, though the government’s preference appears to be for an early plebiscite (June), and the outcome too close to call. We forecast the first Bank Rate rise in August 2016, with the risks tilted towards a later move – we remain more dovish than the (perennially hawkish) City consensus and current MPC signalling. Downside risks stem from the £7bn fiscal hit to disposable incomes, Brexit risk postponing capex/hiring and any export-led recovery remaining elusive against a backdrop of deteriorating global trade and GBP appreciation.”