18 December 2020
The FTSE 100 was held back by a stronger pound on Thursday (17 December) as hopes of a Brexit deal grew. The UK’s blue-chip index often falls when the pound rises because most of its constituents make their revenues predominantly overseas. The FTSE 100 ended the day down 0.3% at 6551.06.
SECTOR IN FOCUS
It’s pretty unusual for companies to publicly and directly criticise the Government, but then again these are pretty unusual times.
Revolution Bars Group plc (RBG), operators of a 74-strong chain of bars, hit out at the Government on Thursday (17 December), labelling its support for the hospitality industry as “nothing short of scandalous”.
Coronavirus has been particularly hard on pubs and restaurants, which have been subject to some of the harshest trading restrictions.
To offset some of the lost trade over the Christmas period, the Government earlier this month offered a grant of £1,000 to wet-led premises in areas with the toughest restrictions.
But Rob Pitcher, CEO of Revolution, called the offer “derisory and insulting” as his firm announced a £31.7m pre-tax loss in the year to 27 June.
Tim Martin, the founder and chairman of pub chain J D Wetherspoon plc (JDW), has also been highly critical of the government’s support for the sector.
Whisper it quietly, but a Brexit deal may be finally in sight.
Michel Barnier, the European Union’s chief Brexit negotiator, tweeted on Thursday (17 December) that “good progress” had been made on some of the key sticking points but that the “last stumbling blocks remain”.
However, Cabinet Minister Michael Gove put the chances of a deal at “less than 50%” on Thursday. Whether he genuinely believes that or whether it is a front to bolster the UK’s hand in the negotiations we’ll never know.
Either way, with two weeks to go until the UK leaves the orbit of the EU’s trading rules, time is off the essence for both sides to achieve an agreement.
However, many analysts agree that, regardless of a deal, both sides will be worse off than if Brexit had never happened.
Analysts at Dutch bank ABN Amro are the latest to share their thoughts on the economic impact of the split.
Even if a deal is made, they believe that the UK’s economy will be 5% smaller “in the long run” than if it had remained in the EU. This rises to 7.5% if there is no deal, they predict.
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No major UK companies are reporting results or trading updates next week. However, Monday (21 December) will see Tesla debut on the popular S&P 500 index in the US, capping off an extraordinary year for the electric car giant. Since the start of 2020, its share price has rocketed by more than 640%, becoming the world’s most valuable automaker in the process. The firm’s admission into the S&P 500 means that investors holding tracker funds following the index will automatically gain exposure to it.