Catalans vote for independence

The wealthy Catalan region of North-East Spain voted yesterday in an unsanctioned referendum on whether they wish to secede from the rest of the country. In an official violent day of polling, 90% of Catalans voted to leave. Riot police injured more than 700 citizens and the Regional Governor said that the Region now has a mandate to declare a Unilateral Independence. Spain’s capital and the Government cannot allow this to happen although it is difficult what concessions they can make even of the wish to do so.

Further upheaval for the common currency is likely with the Eurozone still unsure about the role Germany will now play following Chancellor Merkel’s need to cater more for the strengthening right wing of her country’s population.

The Euro has started the week on the backfoot and is probably going to be affected for the rest of the year.

An attempt to appeal to the Catalans sense of Spanish Nationalism failed dismally as the strength of feeling following the vote was felt throughout Spain.

EU facing tough time

Brexit, Germany and now Spain have brought political upheaval to the EU and demonstrates clearly that bringing together the nineteen countries using the EU and the full EU complement of twenty-seven (following Brexit) will always be a tough if not impossible conundrum for the European Council and European Commission.

Immigration, business and the environment will be the major elements of Merkel’s fourth term as she must appease her coalition partners while being aware of the effect of having Hard Right members in the Reichstag will have.

The common currency has started Q4 on the back foot and looks set to remain there as monetary policy in both the U.K. and U.S. could be tightened in the coming months.

The call for Mark Carney will be a tough one as his recent demeanour appears to say, “if the MPC votes in favour of a hike so be it but I am unsure it is necessary”.

The latest inflation report will be released on 2nd November and this will coincide with the next MPC meeting. Inflation is expected to peak in November so the BoE’s vision on how it will act from then will have a major bearing on future monetary policy.

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Brexit arguments leading to stalemate.

As global trade ambassadors look at the performance of the U.K. Brexit negotiation team, they must wonder if the benefits accrued from tariff free access to the U.K. market will be worth the hassle.

The inability of the U.K. Government to come up with concrete proposals in response to the EU’s original demands has brought about political turmoil and division with the Governing Conservative Party that has so far led to the loss of their Parliamentary majority and there is a real possibility of them losing their leader this week as a prelude to losing an election.

As their annual conference starts, the Conservative Party are riven by divisions over Brexit in particular but domestic issues like the minimum wage and the whole austerity programme are starting to also be discussed with opposing views coming to the fore.

Theresa May, The Prime Minister, is facing a tough time to produce a sufficiently powerful performance to rally her colleagues and Party Members round her as the challengers for her job start to produce their own “manifesto’s. Foreign Secretary Boris Johnson, current favourite to succeed May has produced a further four-point plan that totally illustrates his hard Brexit credentials. The other hard-line potential Leader Jacob Rees Mogg may choose to take a senior seat in Cabinet and bide his time leaving Johnson the clear favourite since backbenchers clearly favour a tough stance with Brussels.

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Alan is a highly experienced banker with an in depth knowledge of Corporate Banking, Treasury and Trade Finance. He has had a varied career in Global markets, Risk management, FX Trading and Sales & Interest Rate Management. He has managed sales teams mentoring his team in both markets and marketing.He has been published in a number of journals and has appeared daily on radio to discuss market movements and events. His first novel was recently published.