In a speech today, Michael Gove elaborated on his bid to become the new Conservative party leader. Most importantly, he said there will be no early general election before 2020 and that Article 50 will not be triggered before year-end. This was in line with what Theresa May said yesterday, see also Brexit Monitor No. 15 , 30 June, for more details. For more on Michael Gove's bid see The Guardian .
A full Bank of England summer cut of 25bp is more than fully priced in the markets. Markets also think it is very likely that the Bank of England will cut further.
Chancellor of the Exchequer George Osborne spoke today and he suggested that the government will no longer aim at a budget surplus by 2020 see Bloomberg story . He also tweeted that there are 'clear signs of economic shock in aftermath of leave vote'.
John McDonnell, ally to Labour leader Jeremy Corbyn, has said that Corbyn is likely to face a leadership challenge in 'the next few days', see BBC . See election rules at BBC website .
In Nordic outlook after Brexit we give some more details on how the macro outlook has changed for the Nordic countries following the UK's leave vote. The GDP growth outlook is generally lower with a high degree of uncertainty.
ECB sources said today that abandoning the capital key in QE purchases is not currently being debated. The comment followed yesterday's rumours that this was being considered, which resulted in big moves across EUR FI markets. For cross sovereign market implications of altered QE weights see our tweet from yesterday evening.
A couple of prominent ECB members both repeated that Brexit will affect the euro area recovery. According to Coeure, the ECB is ready to intervene if needed and Praet said the ECB can react very quickly to crisis, thought it cannot untangle political uncertainty created by surprises like Britain's vote to leave the EU. ECB member Nowotny was also on the wires and said the ECB will give a 'timely signal' on whether or not QE will be extended beyond March 2017 . In our view, this points to an announcement about the QE programme in September.
German Finance Minister Schauble rejected steps for additional euro area integration. Instead, he wants to expand cooperation between the remaining 27 members to strengthen cohesion, which according to him could include completion of the internal market, better control of external borders, common asylum policy and unhindered cross-border movement of capital.
In Austria, the Constitutional Court has said the presidential election will be re-run after the far-right Freedom Party - which narrowly lost the previous election - said that postal votes had been illegally and improperly handled. According to the Court the decision to hold a new election has 'no winner and no loser', it has only one aim: to strengthen trust in the rule of law and democracy', see BBC .
See overleaf for comments on financial markets and Brexit timetable. See financial markets table and charts from page 3 and onwards.
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