Significant Impact of Reversing Brexit on the UK Economy is Possible

 

According to the world’s leading economic think-tank, the reversing Brexit is expected to cause a positive and significant impact towards the British economy, issuing an extreme warning on the possible consequences of EU exit.

 

Based on the report that highlighted the weak economic growth of UK since the referendum last year, the Organisation for Economic Co-operation and Development (OECD) warned of the possible risks in establishing an essential trade deal with the European Union.

 

The UK economy has the tendency to hinder its progress by a disorganized Brexit, in case of a failure of Brussels negotiations. This could further push the sterling pound lower resulting in a failing credit rating in the UK. Also, it underlined the uncertainty of Britain to break up whenever Northern Ireland and Scotland consider again their fate in the EU due to Brexit.

 

José Ángel Gurría, the OECD secretary general, advised that increasing inflation triggered by the sluggish pound would likely stall investments and expenditure. While the government should not create new barriers within EU and UK.

 

On the other hand, Chancellor Philip Hammond persisted that actions from the government relative to the referendum provided necessary confidence for businesses.

 

At the same time, British Liberal Democrat Jo Swinson addressed that the report caused vindication to the call of her party regarding a new referendum that offers an “exit from Brexit.”

While according to Shadow Chancellor John McDonnell, the report depicted a “damning picture” about the economic management by the government coupled with the Brexit process.

 

Moreover, the most recent United Kingdom OECD Economic survey forecasted growth in the economy by 1% next year, this projection could get worse without free trade agreements. The EU exit exacerbates the demand to renew employment productivity growth, considering the statement from the OECD that it remained steady and failed to manage any meaningful contribution to British output since 2007. Hence, this is the weakest data outside South East England and Greater London.

 

The differences among regions and labourers could lead to a significant distinction between people with regards to profits and resources, work and income and skills and education.

ECB’s Asset Reduction of €40B Starting This October

 

On October 26, the European Central Bank is scheduled to reduce their monthly asset purchases to 40 billion euros from 60 billion euros as reported from the poll of Reuters. The results were divided on whether it will last for six or nine months following the program.

 

The E.U. is undergoing the “best” momentum in growth for a decade yet, the inflation is kept at 1.5 percent and it is still lower than the target of ECB at almost 2 percent. The anticipated figure is hoped to be maintained until at least 2019.

 

The central bank is put under pressure by some members of the ECB’s Governing Council to send some signal with the intention to take it easy and put an end to their quantitative easing program since the general economic situation in the eurozone has already improved.

 

Moreover, a more impactful action of the ECB is putting a limit on the amount of debt which is about to be attained by the central bank despite more than two years of purchases worth greater than 2 trillion euros consisting mainly of government bonds. The set limit on the allowed debt is permitted in some countries. This implies that the central bank would not augment the guideline and does not have much of a choice but to trim its purchases and strive to oversee the objective as much as possible.

 

The chief economist of ING described the October meeting to be one of the “greatest balancing act” since. The ECB needs to cut its bond purchases as a solution to the shortage problem but at the same time, they have to maintain a loose inflation target. Moreover, he said that they have to make an effort in publishing the report and to prevent from the misconception of being overly hawkish which makes easing a problem in this stance.

 

A survey in a much larger stand including more than 100 economists last October 11 to 17 has indicated growth in comparison to the former polls. Although, it has been forecasted that the eurozone growth will be sluggish next year and keep the inflation forecasts the same or lowered.

A total of 45 economists mentioned as an additional question on its most recent poll saying that the ECB will push through the reduction program in the October meeting. The target amount of reduction for January is assumed to be at a bigger value ranging from 5 billion euros to 40 billion. The median was lessened up to 20 billion euros.

Forecasts

 

The predicted growth for the eurozone economy is 0.5 percent in the previous quarter similar to the present whilst there was 0.6 percent in the second quarter. Overall, the Average whole year growth was predicted to be at 2.2 percent for this year from 2.1 percent forecast in September.

On the other hand. the predicted inflation rate was an average of 1.5 percent for the year and 1.4 percent the year after which has been kept the same from the survey in the previous month.

 

As for the forecasts for big countries, they were all revised higher according to the most recent survey. The biggest economy in Europe, Germany, is anticipated to grow 2.1 percent this year and 1.9 percent the following year. This was revised up compared to the July poll estimates of 1.8 percent in 2017 and 1.7 percent and 2018. Moving to France, the prediction was also revised from the previous one with an average forecast of 1.7 percent until 2018. Nevertheless, this is still on the track of Macron’s government projections.

 

 

Unemployment Rate in France Drop in September

 

The total unemployment figures of France reduce in September based on the records from the Labour Ministry issued on Tuesday. This encourages French President Emmanuel Macron to execute further efforts to improve the job market.

The number of unemployed individuals in the mainland France was lowered down by 64,800 last month, this is the largest decrease since 1996.

The 1.8 percent drop after a month and 0.5 percent within a year resulted in a total of 3,475,600 jobless people which is the lowest level from the month of April.

The improvement was achieved due to reform efforts by Macron’s leadership that created more jobs and increased growth.

 

President Macron is considering the reduction of unemployment in the country down to 10 percent for years, overhauling the rules of labor industry last month. This could be followed by some changes in unemployment benefits and professional training subsequently.

The business confidence of France also perked up since Macron’s victory in May elections. The French politician pro-business reform agenda tend to shift company’s activities upwards in order to manage robust demand, according to a survey published on Tuesday morning.

Moreover, the emergence of new businesses led companies to hire additional workers in October which could regulate rising backlogs, hence, this is the fastest pace recorded in a decade based on the monthly purchasing managers survey.

 

On the other hand, industrial firms reported that their efficiency is moving towards the highest levels prior the outset of 2008-2009 global financial crisis indicated in a quarterly survey by the INSEE statistics agency on Tuesday. The expanding number of companies seems struggling to keep up with the demand. There are 32 percent of managers who admitted facing some congestion in the production system. This could be a positive indicator for the job markets considering that companies are forced to take more laborers in order to cope the demands of the client, therefore, reducing the unemployment rate.

 

Economic Calendar

 

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ForexMart's Forex Economic Calendar is a real-time, customizable, and multifunctional, forex tool that allows traders to be updated with the latest and most relevant market events. All information that could be potentially impact your trading will be listed and analyzed here.

 

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The current Money Fall contest has already started on November 6, 2017 and will end on November 10, 2017.

 

You can register for the next competition which will take place from November 13, 2017 to November 17, 2017

 

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$1000 Draw

 

ForexMart clients can now get a chance to win $1,000 by joining ForexMart’s Chance Bonus offer. Simply deposit at least $300 or more in your trading account and you will automatically become qualified for the raffle.

 

Winners of the Chance Bonus offer will be chosen via random electronic draws. The $1000 is automatically credited every Monday to one of the eligible accounts which met the conditions of the raffle during the previous week. The Chance Bonus offer can also be mixed with other types of ForexMart bonuses. Clients can also opt to cancel their Chance Bonus eligibility by sending us a notification e-mail at support@forexmart.com.

PRC Besets with Bubble Risk Due to Excessive Reserves

 

The People's republic of China is confronted with bubble risk which was mainly due to higher money supply, as mentioned on Thursday by the deputy chairman of the economic and finance committee of the National People’s Congress.  

 

Huang being the appointed deputy chairman is also considered as the top financial expert where he noted the necessity to change the reserve system of the country’s foreign exchange. At the same time, the central bank needs to be independent in implementing the monetary policy.

 

 

VAT Returns of Small Firms Incorporates to UK GDP Calculation

 

The Office for National Statistics evaluates the British economy by overhauling its way which includes huge VAT amounts from smaller companies for the first time. In the previous survey, the gross domestic product of the country was mainly based on the turnover of 45,000 largest firms. Since December, the data from the third of Britain’s 1.8m VAT returns will also be included in the turnover for the calculation of official GDP results.

With this, assessing UK economic growth will have dramatic changes for this could provide further insights from particular areas and industries. A higher proportion of VAT returns involves small businesses with a total of 98pc of UK companies.

 

In the past estimates of GDP, pubs and restaurants sectors, particularly  "food and beverage service activities" have high levels according to the 172 monthly poll and 28,000 tax returns.

According to the ONS, a much more detailed data will provide a comprehensive output of pubs, restaurants and takeaways and restaurants among various regions. The first new estimate encompasses VAT returns coming from small and medium businesses including 100 or fewer headcounts. While survey for large companies will remain to be part of the data gathering and ONS’s report. As there is only 20 percent of smaller firms in the UK economy, which means that the data accumulated by the national statistical institute will be more accurate but the overall GDP result could possibly be not altered despite its inclusion because major firms have a greater impact.

 

Based on the perspective of PwC’s Economist John Hawksworth, it would be better if the Statistics authority will release GDP forecast “ with and without (the) use of the new VAT data" respectively, in order for the public to understand the difference. On the other hand, ONS  chief economist Nick Vaughan announced that including additional information will be a gradual process.

 

 

 

This week’s most popular deal:

Economic Calendar

 

Know what will happen next in the financial markets with ForexMart's Forex Economic Calendar.

 

ForexMart's Forex Economic Calendar is a real-time, customizable, and multifunctional, forex tool that allows traders to be updated with the latest and most relevant market events. All information that could be potentially impact your trading will be listed and analyzed here.

 

A trader that knows more, profits more. Use ForexMart's Forex Economic Calendar and become a better trader today.

Good US Economy to be Passed to Powell

 

Jerome Powell is officially getting closer to becoming the next Fed Reserve Chairman. The Fed Governor said that he is not worried about another financial crisis in the banking system. Powell was asked during the Senate hearing on Tuesday if banks remain too big to fail, and he answered “No”. He noted that regulators were able to conduct positive negotiations and there could be nobody to have an idea about the previous situation in case that a run on occurred on one of these giant financial institutions.

 

The incoming Fed head described that regulators were left with  “no practical choice” and decided to let these huge banks to fail since the entire financial system resulted in a breakdown. In 2008, the Fed together with Treasury Department organized programs that could bring liquidity to American banks during the crunch which includes Bank of America (BAC), Citigroup and JPMorgan (JPM). Moreover, some were unable to survive like Lehman Brothers while Bear Stearns was bought by JPM at an extremely discounted price.

 

At the same time, the US economy is seated in a better position compared during the Great Recession. The next Fed chair stated that the country may expand nearly at 2.5% in 2018 as reported this year. The 2 percent growth is regarded below the average level according to the majority of forecasters. Goldman Sachs also has the same prediction of 2.5% growth in the economic growth of the United States, and for the world economic outlook is expected at 4% increase.

 

When talking about the US labor market, J.Powell expressed that the decline in the labor force participation rate among prime-age men indicates a dull employment despite the 4.1% jobless rate, as the reduced wage growth shows slack labor market. Just like Yellen, Powell stated his fears regarding low inflation rates, stressing the importance of reaching the  2% annual target.

 

 

U.K. Economy Forecasted to have a Moderate growth, CBI says

 

The tepid growth of the U.K. economy will remain for some time. This could weaken in the next years to come, as stated by the Confederation of British Industry.

 

The CCI current forecast says the development by 1.5 percent next year and 1.3 percent in 2019. This would be the worst annual operation since 2009 when the economy declined.

 

Yet, there is a drawback which will probably occur when the projections are high since they anticipate Brexit to proceed without a problem. The U.K. will most likely get to an agreement with the European Union regarding their transition deal early next year. This would take place when the Brexit leaves in March 2019.

 

The CBI also mentioned that the domestic demand will maintain its dovish stance in a definite time while there is economy support from net trade. This was based on the poll on Friday indicating that the U.K. manufacturing growth is strongest over four years time.

 

 

Germany’s Optimistic Outlook due to Higher Industrial Orders The industrial orders in Germany surged surprisingly in October because of domestic and foreign demand from non-euro zone according to the reports on Wednesday. This implies that the country will have a good momentum in the next few months. Orders of products that are locally made increased for three consecutive months and supported by the data up by 0.5 percent in October compared last month, according to the Economy Ministry. Despite the fact that bulk orders are lower than average for the month of November. It is anticipated for the data to decline by 0.3 percent following an upward revision of 1.2 percent in bookings for the month of September based on the survey from Reuters. An economist described the situation to be in a good condition, given that the economy has been robust the past few months while there is a “moderate growth” in October as a good result. Although, he said that growth would not move higher amid higher books of orders and more capacity to utilize. The German economy has gained momentum by the third quarter and has been expanding since 2010 but there are still concerns since Germany doesn’t have a new government over two months following a national election. Conservatives representative, Chancellor Angela Merkel, lost against the far-right in the September poll. It is presumed that Social Democrats (SPD) will hopefully approve to run again the current ‘grand coalition’ after a failed attempt of alliance with the environmentalist Greens and pro-business Free Democrats. Nevertheless, the Economy Ministry said that there is high demand for it along with record-high business confidence and positive growth in the manufacturing sector. The orders data increased by 0.5 percent while there is 1.6 surge in contracts beyond the eurozone as it counterbalances the 1.2 drop in the bloc. Domestic contracts rallied by 0.4 percent. Interest for both capital and consumer goods surged in October despite the demand for intermediate goods declined a bit. Comparably, there is less volatility in the past two months where it declined by 3.4 percent which is much higher than the level two months ago.

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Chinese Economy to Surpass the US in 2032 It is expected that China will outperform the American economy in the year 2032 based on a new report. Moreover, a report from the Centre for Economics and Business Research in London noted by Bloomberg News further shows that next year India is predicted to get ahead to the United Kingdom and France and gain the fifth rank as the largest economy in dollar terms. In this regard, India is projected to be in the third place as the biggest economy in the world by 2027. According to report, the four biggest economy by 2032 consists of China, India, Japan and the United States. In addition to it, Indonesia and South Korea will take the tenth place. While President Donald Trump often brags about the American economy, as the president tweeted last week regarding the achievements of his administration over the previous year which includes the "Record Economy/Stock Market." Trump further mentioned that earlier in December, the tax reduction in the GOP tax bill signed last week will boost investment in the US economy and its laborers.

The current Money Fall contest has already started on January 1, 2018 and will end on January 5, 2018. You can register for the next competition which will take place from January 8, 2018 to January 12, 2018 Note: Registration for the next competition finishes 1 hour before the contest starts. Congratulations to all the winners!

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British Economy Expanded in Q4, says Thinktank Based on the Thinktank's forecast, the longest period of increasing factory output in Britain over 23 years has led the British economy to reach its fastest pace of growth rate recorded in late 2016. The National Institute of Economic and Social Research (NIESR) outlines the GDP expansion for 0.6 percent in the fourth quarter of 2017, showing higher figures compared with the 0.4 percent in the previous quarter and further exceeded the latest City projections. Amit Kara, Head of UK macroeconomics research at NIESR, stated that the activity showed an improvement during the second half of 2017, after a sluggish start in 2018 in which the GDP grew by 0.3 percent in Q1 and Q2. The Thinktank expects that the strong economic performance of the country accompanied by high inflation rate will prompt the Bank of England to implement interest rate hike by 0.25 points to 0.75% in May. Followed by further growth every six months until 2021, as official borrowing costs gained 2 percent. The Office for National Statistics (ONS) issued a data that indicates the rise in output of UK factories for eighth straight months in November, this achievement was reported in May 1994, driven by the broad upswing of manufacturers in the world economy. The manufacturing output came in 1.4 percent higher in three months until the end of November versus the recent quarter. As the factory output increased, the overall industrial production also picked up by 0.4 percent which includes products from energy plants, mines, quarries and oil and gas sector. The sudden spell of cold weather in November supported energy production on the back of the warmer climate in October. The manufacturers of machinery and equipment fabrication contributed major growth, as projects under renewable energy recovered coupled with other costly works. The optimistic prospects for the industrial production provided 14 percent of the GDP result, which helped negate the stumbling growth in consumer expenditure due to rising cost of imported goods since the Brexit referendum and further depreciated the British pound. On the other hand, the construction industry remains to have a difficult time for more than five years, showing a 2 percent reduction in three months to November and marked the sixth consecutive period of contraction. However, there was still a slight improvement in November by 0.4 percent amid the decline in the past quarter. The robust global economy supports the United Kingdom in exporting additional products and services towards different parts of the world. The ONS reported that the UK still have higher imports than exports since in the past but the deficit was reduced by £2.1bn ($2.8bn) in the three months to November. Moreover, economists suggest that growth in Q4 last year would be lower than the predictions of NIESR because of complication in Forties oil pipeline in December.

ForexMart Launches Web Terminal for Traders We have launched a trading web terminal which will be available to all ForexMart clients. This is an online-based trading platform which will enable clients and partners to keep track and supervise their trades at any given period of time without the necessity of downloading the MT4 trading software from the site. The web terminal also has a user-friendly interface which can be customized by partners and clients in accordance to their preferences. The launching of this web terminal is part of our continuous efforts to further improve our services and to consistently provide a better trading experience for both our clients and partners, as well as to create more opportunities for traders. The web terminal can be used for both old and new ForexMart trading accounts. For further information or any inquiries regarding this new feature from ForexMart, you can visit www.forexmart.com or you can contact our customer service at support@forexmart.com

ForexMart App is Now Available on Mobile You can now use the ForexMart application on mobile. We are launching ForexMart application on 11 january. It can be downloaded from both App store for Apple and Play Store for Android users. This allows users to trade anytime and anywhere at their own convenience by just connecting to an Internet service provider. More and more consumers are shifting toward mobile platforms with continuous improvement in technology. Forex trading apps simplifies trading and allows accessibility through mobile phone that makes it more convenient. There is still wide range of options in placing orders from mobile devices such as iPhone or Android. ForexMart app offers different features. Traders can access multiple charts that give real-time quotes as well as relevant economic news and latest forex analysis. Exchange rates over 100 different currencies are also available with buy and sell options. The application is especially designed for forex trading that is easy to navigate and works glitch-free for more efficient trading. Forex traders will find this app very useful and handy. Check out this new app from your App Store or Play Store!

ForexMart Launches Web Terminal for Traders

 

We have launched a trading web terminal which will be available to all ForexMart clients.

 

This is an online-based trading platform which will enable clients and partners to keep track and supervise their trades at any given period of time without the necessity of downloading the MT4 trading software from the site. The web terminal also has a user-friendly interface which can be customized by partners and clients in accordance to their preferences.

 

The launching of this web terminal is part of our continuous efforts to further improve our services and to consistently provide a better trading experience for both our clients and partners, as well as to create more opportunities for traders.

 

The web terminal can be used for both old and new ForexMart trading accounts. For further information or any inquiries regarding this new feature from ForexMart, you can visit www.forexmart.com or you can contact our customer service at support@forexmart.com

Account Verification

 

Verify your ForexMart account to access all our services. Please take note this process can only be done on our website. If you do not verify your account, you may not be able to fully access our services.

 

Account verification is easy and simple. Just provide a scanned copy of a valid ID or passport and a proof of residence. We do not accept electronic bank statements and electronic utility bills.

 

After sending the requirements, our account team will look into it. You will receive an email validating your account or requesting additional documents for the verification process within 72 hours after uploading the requirements.

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