UBS | The focus in the Brexit debate is often on the UK’s relatively large current account deficit. This is understandable, as a period in which Foreign Direct Investment was harder for the UK to attract in a post-Brexit world would likely imply the current account would need to correct.
UBS | A date for referendum is set and the pound is getting pounded. The United Kingdom reached an agreement with the European Union and the UK announced that the referendum vote will take place on 23 June 2016.
LONDON | UBS analysts | UBS expects the ECB to widen its asset purchase programme to include corporate, parastatal and sovereign bonds on 5 March 2015. Our base case is for €1 trillion of sovereign bond purchases to be undertaken over a two-year time horizon. In this note, we examine how a broadening of the ECB’s QE programme is likely to impact the UK economy and sterling-denominated asset classes.
The European Union (EU) is a group of sovereign states, who are sovereign in that they are entirely free to leave the EU. This freedom to leave means the EU is not a “super state.” There is no coercive force — and no EU army — to make Britain or any other country remain in the union. Britain enjoys a freedom, within the EU, that colonies did not enjoy within the British or other European empires. Britain is, therefore, entirely within its rights in considering the option of leaving the EU, although that does not mean such a course would be wise.
LONDON | By Víctor Jiménez | Raise the main interest rate? Certainly not. Or not yet, anyway. While the US economy is not showing clear signs of having overcome the assisted breathing phase (i.e. printing money or the recently wound up phase of quantitative easing that the Fed finished two weeks ago), the chances are that the Bank of England will keep the price of the pound at a very low level.
madrid | By Álex García
MADRID | By J.P. Marín Arrese | Bets heavily lean on the No campaign snatching victory tomorrow from the jaws of defeat in the Scottish referendum. Trust professional gamblers for picking out the winning horse. The prospects of a yes vote on independence have suddenly started to look dim.
MADRID | The Corner | Historically, German housing prices have remained flat, but since 2011 they have increased by 30% (a low figure when compared with +150% growth of the last 15 years in UK, France and Spain). Morgan Stanley analysts already see signs of recovery in the German residential sector, so the stocks exposed to it may be attractive. Moreover, housing prices in the UK have fallen significantly more than expected: 40% in August from 48% in July, instead of the 47% expected fall. It’s the lowest level of the past 12 months. According to Bankinter, this is a good sign “because it dissipates the fear of a possible housing bubble and reduces the BoE arguments to raise its main interest rate in advance.”
LONDON | By Víctor Jiménez | The financial services industry in Scotland is more than twice as large as that of the rest of the UK when compared to the gross domestic product. But where the unionism points out an unaffordable risk, some analysts see an opportunity. (Image: The first minister of Scotland, Alex Salmond by Robert Perry/EPA)
MADRID | The Corner | The pound fell around 1% against the euro on Monday and the dollar after the results of the first serious poll giving the victory to “yes” in the referendum on separation for Scotland. According to the latest YouGov poll published a day before, the support of Scottish independents would reach 51% vs 49% who are against if the undecided are excluded. UBS economist Paul Donovan commented about the risk of a narrow result in the polls in favor of remaining in the UK, similar to what happened in Quebec in 1995.