The Monday note - 10 December 2018

• The FTSE 100 closed 202 points lower last week at 6,778.1, as concerns over the US-China trade war continued to weigh on sentiment. The ten year Gilt yield stood at 1.27%. 
• The yield spread for UK corporate bonds has widened more than for European bonds. British firms are thought to be facing a ‘Brexit premium’ to borrow, according to a Reuters report. 
• China’s exports grew by 5.4% in the year to November, although this is half the level analysts had been forecasting. Exports to the US increased by 9.8%, partly due to firms buying goods in anticipation of future tariff hikes. 
• A Financial Times article said that more funding for Crossrail, London’s under construction East-West rail link, could be announced this week. Sources told the newspaper Crossrail’s launch date might be delayed again. 

Chief Economist comments: 

Tomorrow, Parliament is expected to vote down the EU withdrawal agreement, and May probably intends to use the rejection to win concessions from the EU. However, a very big defeat might sink her government. Boris Johnson appeared on The Andrew Marr Show yesterday, suggesting the UK withhold half the EU’s exit payment money until a new deal is offered. This could play into May’s hands, as the EU contemplate who might replace her. Nevertheless, it may soon be academic who is Prime Minister. Some pundits say that Parliament is taking control of Brexit, and most MPs voted remain at the referendum. One has to wonder: are we really still leaving the EU next year?