Finance Watch

Ian MacFarlane, director, JCRA

Much has come to pass in the markets during the last month, notably the election of Mr Trump in the US, the subsequent sell-off in global government bond markets, the ongoing debacle around Brexit and the Autumn Statement in the UK.

The US presidential result was an unexpected win for the Republicans with the controversial billionaire Mr Trump snatching victory from Mrs Clinton. It remains to be seen if the President-elect delivers everything that he has promised, but a greater focus on infrastructure spending in the US seems to be a welcome certainty.

A rate rise in the US in December also now seems ‘a given’, with market polls predicting well over 90% certainty at present. For the time being at least, global interest rates look to be on the up.

Brexit, or not, as the case may be, is understandably still firmly in the media with the latest potential twist being that parliament may need to have a vote on Article 50, which would certainly put the cat among the pigeons. Even Tony Blair is getting in on the act suggesting that the exit from the EU could be blocked.

Interestingly, he is suggesting that the UK should have a final decision on whether to leave the EU once Prime Minister Theresa May has negotiated the final deal with the EU.

We suggest he is hinting at a second referendum for the UK, which frankly is quite likely to result in a ‘remain’ vote even if it was held now, not to mention after when/if a deal has been negotiated. Clearly a hot topic for the foreseeable future but in any event, the UK does need to get on with whatever is decided and remove this cloud of uncertainty.

Chancellor Philip Hammond’s first (and last) Autumn Statement in the UK was an interesting read. It seems that the UK has abandoned efforts to balance its books if this will adversely affect growth.

In addition, more than half of the forecast deterioration in public finances, circa £60bn, is down to Brexit related issues. No surprise there then.

However, markets did not really react to this revelation and given the predicted cataclysmic fallout from a ‘leave’ vote that was forecast pre-referendum, it is perhaps no surprise that markets took this in their stride.

The chancellor’s announcement of £23bn of expenditure on infrastructure was certainly welcome but will be spread over the next five years. Where have we heard that before? Let’s hope we get some clear direction in the New Year.

A very Merry Christmas and a Happy New Year to all.