Concerns about the spread and economic impact of the coronavirus from China weighed on markets last week. With the Chinese New Year looming, the city of Wuhan, where the outbreak first began, has been placed under quarantine. Although too early to validate the economic impact of the new virus is seen as potentially heavier than that of the SARS outbreak in 2003.
The UK is set to leave the European Union this Friday more than three years after the Brexit referendum. The EU withdrawal bill cleared its final parliamentary hurdle, receiving royal assent and now awaits approval by the EU Parliament. The departure this week heralds the start of an 11-month standstill transition that will keep current trading and security relationships unchanged.
The latest manufacturing and services output data for the UK from IHS Markit for January showed that there has been a rebound in economic activity. However, the January PMI survey is the crucial pre-meeting release. Should the PMI survey improve then it should reinforce the message from the other post-election data and encourage the majority of the MPC to wait and see how the economy responds to the outcome of December’s election.
A growing movement by governments to tax American tech giants has quickly emerged as the largest global economic battle of 2020. It could eventually lead to the US raising tariffs on UK goods. Last week the UK was told to hold back on a new tax on big technology companies planned for April, with the view of establishing a more global framework.
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