The Monday note - 16 October 2017

• The FTSE 100 closed on Friday at 7,535.4, up 13 points on a week earlier, as investors digested mixed news on global growth and Brexit. The ten year Gilt yield stood at 1.37%. 
• Some media reports suggested the IMF last week cut its UK GDP forecast for this year to 1.7%. In fact, that figure was revised downwards back in July, the IMF simply confirmed the revision. 
• EY Item Club, the economic forecaster, counselled against a UK base rate increase in the near-term; citing a “fragile economic outlook”. 
• The UK’s trade deficit, excluding commodities, widened to £10.8 billion in the three months to August. A small increase in the services trade surplus was overshadowed by a larger deficit for goods. 

Chief Economist comments: 

The UK’s trade figures highlight the need for a reality check as we move towards Brexit. The pound’s devaluation has not boosted manufacturing and agricultural exports, in fact the goods deficit is worsening. Many UK manufacturers import components, which can make the devaluation bad news not good.

Meanwhile, service industries are supporting the UK’s trade figures. Given this, the government’s relative silence on whether the financial sector will maintain access to the single European market is a concern. The surge for goods exports has not materialised, so Britain needs to secure its services income.