Retail sales drop more than expected

UK consumer spending slowed down by more than expected last month with the retail sales figure for September showing a 0.8% decline month-on-month. One of the biggest causes of this decline was a relatively large drop in food sales, with their decline the biggest fall since October 2015. The 3rd quarter saw fairly good results in the first couple of months as the good weather boosted spending but the reading for September marks a disappointing end to the period. We’ve had 3 data points from the UK in the last 3 days with only the unemployment figures providing any real support for the pound. Despite this sterling continues to keep calm and carry on despite the obvious Brexit threat with negotiations on this front clearly not progressing as many would’ve hoped.        

May willing to extend Brexit transition period   

UK PM Theresa May told European leaders last night at a Brussels summit that she is willing to extend the current Brexit transition period beyond 2020. At present there is expected to be a 1-year window following the triggering of Article 50 next March that Britain will remain locked to the EU and her willingness to extend this is her first major concession of late in trying to forge a deal. The move will no doubt infuriate hardline Eurosceptic MPs in her party, who believe that an extension leaves Britain in a “vassal state” as the country would continue to observe EU rules but not have any votes or representations within their institutions. The delicate balancing act for the PM of reaching a deal that causes minimal short term disruption, while also satisfying Brexiteers enough to squeeze it through parliament, given her wafer thin levels of support, looks increasingly difficult - but that’s not to say she won’t pull it off.