MNI: BOE Survey Finds UK Firms Uncertain Over Brexit Outturn

--BOE Survey: Firms Put 40% Probability On No Deal By Mar '19; Disorderly Brexit

By David Robinson

     LONDON (MNI) - A Bank of England survey found UK executives were deeply

uncertain about how Brexit will unfold, placing a median 40% probably on a

disorderly outcome.

     The UK is set to leave at end March 2019, with a provisional agreement for

a transition period to the end of December 2020. The BOE Decision Maker Panel

(DMP) survey found executives put a 40% probability on there being no deal in

place by March next year.

     The government and the BOE itself have championed a transition period as a

way of providing greater certainty to business but the DMP found that "companies

attach probabilities to a wide range of possible outcomes, indicating that they

are very uncertain about how Brexit will be implemented."

     The current UK/EU negotiations have left it wide open for negotiations over

any future trade deal between the two to carry on into the transition period --

with the time until December 2020 simply an extension of existing arrangements.

The DMP found that companies attached more weight to the UK leaving the EU in

2021 than 2019, although legally the UK will be out in 2019.

     The DMP found inflation pressures easing, with businesses expecting

inflation to slow to 2.5% over the year ahead, having peaked at 3.0%.

     The BOE agents report for the first quarter, released at the same time,

found employment intentions still pointed to "modest headcount growth."

     Services employment intentions softened with firms facing slower

consumption growth and higher non-wage costs from rises in the National Living

Wage and pension auto-enrolment. 

     Overall, total labour cost growth remained subdued pay settlements have

risen for many firms, fitting into a range of 2.5% to 3.5%.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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