The Day at a Glance | October 16 2020

The Top

· Johnson announces that Brexit preparations will begin without a trade agreement; he may still be open to negotiations this year.

· Republican Senators reject Trump`s proposal of approving a fiscal package of more than the $1.8 billion dollars originally proposed by the White House.

· Economic indicators: Deflation is confirmed in Europe during September (-0.3% annual); retail sales in the US exceed estimates (1.9% monthly in September).

Economic environment

The British Prime Minister officially announced that preparations will begin for Britain to leave the European Union on January 1st, 2021. Boris Johnson assured that it`s time for the country to prepare for a Brexit without an agreement scenario after the EU rejected “serious negotiations” of a trade agreement similar to the one that the block has with Canada. The EU delivered an ultimatum; it called on Britain to yield on some of its main points or face a Brexit without an agreement. For Johnson, this is a sign that they must prepare to leave the block. However, London will leave itself open to negotiations to find a simple agreement based on free trade basic principles. In its last effort, the British government will seek to establish a similar agreement that Australia has with the EU; members of the European negotiating team will visit London next week. There are concerns of a chaotic ending to a 5 year long negotiation that will affect the flow of hundreds of billions of dollars in trade, which would shake productive chains in both economies and worsen the economic crisis caused by the pandemic. The Pound has recorded great volatility this morning.