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Bank of England comments compound Brexit 'muddle'

Wednesday, June 21, 2017 - 01:55

UK Prime Minister Theresa May promised on Wednesday to listen more closely to businesses' concerns about Brexit as she set out her new government's programme in the ceremonial Queen's speech in parliament. But as David Pollard reports, the lack of clarity over her plans - together with apparently contradictory guidance on interest rates from the Bank of England - have London markets scratching their heads.

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Heatwave Britain. With temperatures at over thirty celsius, time to strip off. Though not for everyone. (SOUNDBITE) (English) BRITAIN'S QUEEN ELIZABETH, SAYING: "My Lords, pray be seated." This the Queen's speech - the ceremonial delivery of a new government's new programme. No guesses needed as to the agenda. (SOUNDBITE) (English) BRITAIN'S QUEEN ELIZABETH, SAYING: "My government's priority is to secure the best possible deal as the country leaves the European Union ..." This month's election saw the ruling party's majority slip - Theresa May with a weaker, not stronger hand in trying to get that deal. And consumers more often in search of bargains than beaches - as weak sterling converts into stronger prices. If right now, they don't face rising interest rates - according to hints this week from the Bank of England governor. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF G10 FX STRATEGY, CIBC, SAYING: "If consumers are going to maintain spending they have to do that by either increasing borrowing, which is not particularly sustainable, or running down already low levels of savings, so it is a very challenging environment for the UK consumer sector. And I think that's one of the reasons why the Bank of England are pushing back against the idea of an immediate tightening." But a day later, sterling and bond yields shooting up as the Bank's own economist, Andy Haldane, said he could vote for a first rate hike in a decade - later this year. In a possible policy confusion to mirror the government's own dilemma. (SOUNDBITE) (English) LCG SENIOR ANALYST, JASPER LAWLER, SAYING: "It's a muddling through process at the moment. There's a lot of uncertainty about, really, the government's bold plans for the future. There can't really be any, and even there's uncertainty about the future of Theresa May as prime minister." She has promised to listen harder on Brexit. Though might have little choice anyway - this week alone, five business groups were making loud demands for a soft exit from the EU. The danger they see not heat, as an economy cooling off too fast.

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Bank of England comments compound Brexit 'muddle'

Wednesday, June 21, 2017 - 01:55