Ahead of the next EU Summit Turning the focus back towards the latest news on Brexit and it appears as though the Pound is making some gains vs the Euro so far this week.
Prime Minister Boris Johnson has claimed that time is in ‘short supply’ in order to get a Brexit deal done. Boris has set a deadline of Thursday and if this is not met the UK is prepared to walk away once again from the talks.
One of the main sticking points between the two sides is that of the fishing rights. The UK wants to have full access to the EU market to sell its catch whilst the EU wants full access to the fishing areas which the UK do not want to allow.
If the talks do not managed to get resolved then as of 1st January 2021 the UK will move forward with World Trade Organisation rules and this would increase tariffs on goods. Both parties are keen for a deal to take place but until a compromise can be reached we could see further uncertainty ahead.
If in the meantime a deal looks more likely and the talks progress positively then this could see GBPEUR exchange rates move in a positive direction and confidence returns to the UK and therefore the Pound.
Impact of COVID-19 on UK Unemployment Figures
This morning the Office for National Statistics announced the latest UK unemployment figures for the last three months. Unemployment in the UK hits its highest level in three years according to the latest report.
The latest COVID restrictions are likely to have a further negative impact on these figures in the weeks ahead as it has already caused many businesses to close as they are not able to remain viable whilst social distancing and restrictions are in place.
According to the figures a total of over 1.5 million are now unemployed with approximately 60% of them from the 16-24 age bracket.
With the current furlough scheme due to end and replaced by the new wage support package next month this could see further job losses as we move towards the end of the year.
Chancellor Rishi Sunak stated ‘I’ve been honest with people from the start that we would unfortunately not be able to save every job. But these aren’t statistics, they are people’s lives.’ Clearly the Chancellor is having a difficult time managing the situation and the new tiered system introduced will have further negative consequences as we see more and more business suffer during this pandemic.
One of the likelihoods to impact the UK economy in the future will be tax increases in order to pay for the current furlough scheme and to try and help the economy. Borrowing has risen by enormous amounts since March 2020 with the UK government having borrowed £200bn more than they would have done in a ‘normal’ year.
During August the UK’s national debt hit over £2trillion which is the first time this figure had been reached in history. With the majority of the world’s countries having faced economic hardships this year it appears as though every major economy was hit apart from China.
Get in touch to discuss these factors and their potential impact on your upcoming currency exchange. I’ll be happy to get in touch and discuss your enquiry.