020 7898 0500The main release from the UK yesterday were the construction PMI figures for January. They showed that the sector
struggled last month, dropping to 50.6 from 52.8 in December and well below the 52.4 the markets had been expecting. Many
of the builders interviewed by Markit said that Brexit anxiety was creating hesitancy among clients, with some of them
reluctant to commission new projects with all the current uncertainty still surrounding the negotiations.
Although hard Brexiters are in favour of a version of the Malthouse compromise, it is still not known whether it is even
feasible. The EU believes it is a non-starter, not least because it does not want to restart negotiations. This point
appears to so easily get lost in the noise surrounding Brexit – Theresa May’s government negotiated a deal with the EU
without asking the Commons for their thoughts. That deal was agreed between the UK government and the EU. Then it was
heavily rejected by the Commons. Now everyone wants to renegotiate something that has already been agreed. Perhaps the
government should have consulted those who would vote on the agreement before agreeing it. That is not to say the EU won’t
be open to some changes, but these are likely to be tweaks rather than a total overhaul of the proposals.
Today we will see services PMI and retail sales for January.
