In Samuel Beckett’s “Waiting for Godot,” there’s a line that rings a bit true of Brexit:
“Nothing happens. Nobody comes, nobody goes. It's awful.”
The nothing that is happening is now being stretched out a bit longer, with a new October deadline in place, where once the U.K.’s divorce from the European Union was slated to be in March.
Happy Halloween? Unlikely, perhaps a bit more spooky than happy. There’s a progress report to be given in June as Britain must check in again with Brussels. Beyond the political machinations that have gone on and continue to go on between Prime Minister Theresa May, the Conservative Party and the EU … lies continued uncertainty about what happens next and when.
In the meantime, the toll on U.K. businesses is palpable — indicating that at least something is happening, but an undesirable something. Last month the British Chambers of Commerce downgraded growth expectations for the U.K.’s economy, with a projected 1.2 percent rate in 2019, down from 1.3 percent — portending the weakest growth rate in a decade. In part that’s due to a weakening in business investment in the face of Brexit uncertainty, and that investment is slated to decline by 1 percent, and such anemic showings harken back to the financial crisis a decade ago.
“The diversion of resources to prepare for no deal and the high upfront cost of doing business in the UK is also projected to limit the extent to which investment activity will bounce back over the near term,” said the organization. Net trade will be a drag, too, said the BCC. Drilling down a bit, growth in services will be down 1.1 percent this year, down from 1.2 percent, and manufacturing has been slashed from 1.1 percent growth to just 50 basis points.
When it comes to business investment, uncertainty chills, then kills. The ripple effect hits jobs, which also hits consumer confidence … and a vicious cycle feeds on itself.
And so, what’s next as deadlines come and go? To snip a snippet of Godot again: “We wait.”
Apple Healthcare: You know what they say about apples keeping you healthy and keeping the doctor away … as the tech giant tries to branch well beyond the confines of phones and tablets, its push into healthcare could, according to Morgan Stanley estimates, generate $15 billion in sales for the company by 2021, as the Apple Watch enjoys growing adoption.
Shadow Banking: Coming out from the shadows, and called out by some bank heads as a development that bears watching as a (possible) risk to the economy … but a sizzling growth rate is still a sizzling growth rate, and these less regulated lenders have seen assets grow over the past several years by 61 percent to $185 trillion.
Gig Economy: Critical mass approaches. And the gig economy is moving well beyond dog-walking and Uber to embrace specialized skill sets, a lucrative shift. Our latest Gig Economy Index finds the percentage of gig workers earning $100,000 stood at 40 percent at the end of 2018, up from 30 percent in the previous quarter.
Economic Growth: Amid trade tensions, Brexit, and a general decline in business confidence, the International Monetary Fund cuts its 2019 economic growth outlook to 3.3 percent, down from 3.5 percent that was in place at the beginning of the year. The slowdown will extend to both developed and emerging markets, said the IMF.
Wells Fargo: Some observers cheered when Tim Sloan stepped down as CEO last month, but the ongoing search for a replacement may drag on efforts by the bank to turn itself around and recover from fake account (and other) scandals, according to Wall Street analysts.
Corporate Fraud Grows: The Association for Financial Professionals estimated in its 2019 report that the number of companies hit by payments fraud stands at record highs, as 87 percent of firms with revenues of at least $1 billion were hit by such activities last year, up 7 percent year over year.