The Monday note - 9 October 2017

• The FTSE 100 increased by 150 points last week to close on Friday at 7,522.9, as the slide for the pound boosted the shares of firms who rely on foreign earnings. The ten year Gilt yield stood at 1.36%. 
• The European Commission described a tax deal between Amazon and Luxembourg as illegal. The online retailer will be charged €250 million in back taxes. 
• The US economy saw an unexpected fall in the number of people in jobs. The total number in employment was down by 33,000 in September compared to August, in part due to disruption caused by recent hurricanes. 
• The UK and EU reached an outline agreement on dividing up the bloc’s WTO quota for importing agricultural goods from the rest of the world. However, the US and other nations objected to the deal. 

Chief Economist comments: 

The European Commission is gunning for tech firms and the EU countries that offer them a low tax bill. Last year, Ireland was ordered to make Apple pay back taxes, this year it is Luxembourg and Amazon. Some member states want to see tougher action. Since the vote for Brexit, various EU nations have courted London-based banks and insurers, who are anxious to maintain access to the European single market. It will be ironic if all that happens is a game of economic musical chairs, where the EU draws bank jobs from London (that come with systemic risks) and the UK attracts cash-rich tech firms away from Europe.