The Monday note - 14 May 2018

• The FTSE 100 closed on Friday at 7,726.0, up over 223 points on a week earlier, as equity investors welcomed the Bank of England’s decision to leave the base rate on hold. The ten year Gilt yield stood at 1.44%.
• The Norwegian Prime Minister told the Financial Times she would welcome the UK joining the EEA. It was thought Norway might oppose Britain joining the bloc, which accesses the Single Market without full EU membership.
• RBS has agreed a $4.9bn settlement with the US Department of Justice related to an investigation into mortgage sales, opening a path for the UK government to sell more shares in the bank.
• The latest Sunday Times ‘Rich List’ reported that 94% of the 1,000 wealthiest UK citizens in 2018 are self-made, up from 43% in 1989. The UK’s super rich are now worth £724 billion, up from £658 billion a year ago.

Chief Economist comments:

The idea of the UK joining the EEA was widely discussed in the weeks after the 2016 referendum, but then quickly disappeared from debate. Ministers were quite insistent that they could do much better in negotiations than the “Norwegian option”. Now the House of Lords has added the EEA into the Brexit legislation at a time when the government is unsure whether it can muster the numbers in Parliament to block amendments that would keep the UK in the Customs Union. Suddenly another ‘soft Brexit’ option is back in the running.