UK: Brexit, Service PMI and Brexit - Danske Bank

Brexit remains in the spotlight, as the EU says an agreement on phase 1 must be reached on Monday at the latest in order to assess whether ‘sufficient progress’ has been made in the negotiations’ phase 1 to move to phase 2 (future relationship), said Danske Bank analysts. 

Key Quotes: 

“In the UK, the most important release is the PMI service index on Tuesday. Both Lloyd’s Business Barometer and the UK service confidence indicator from the EU suggest a fall, so we expect a correction down to 54.5 in November although both indicators actually suggest a bigger fall.”

“Brexit remains in the spotlight, as the EU says an agreement on phase 1 (divorce bill, Irish border and citizens’ rights) must be reached on Monday at the latest, otherwise the EU leaders do not have enough time to prepare for a decision on whether there has been ‘sufficient progress’ in the negotiations’ phase 1 to move to phase 2 (future relationship). As the UK and the EU seem have agreed on the ‘divorce bill’, the main obstacle is now to find a solution to the Irish border issue. According to EU officials, the probability of an agreement before the EU summit is 50/50. Overall, the negotiations are moving forward and the negotiation environment seems better now that PM Theresa May has taken over from Brexit Secretary David Davis. Notice that the next EU summit does not take place before March.”