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A Brexit without agreement, in economic terms, would be a trip into the unknown and would most likely involve a serious shock. Even the sober subset of the Brexit promoters concedes this last point in the short term. But at least one likely outcome is clear: the Bank of England would not make matters worse by raising interest rates.
The idea that it may have been a strange idea given by Threadneedle Street last November, when it outlined various scenarios for the departure of the United Kingdom from the European Union. In the most infernal projection, GDP was down 8%, which meant a deeper recession than the one following the 2008-09 financial crisis.
But above all, this 8% catastrophe meant that the Bank would react to the drop in the pound after a Brexit without agreement by raising interest rates to fight the soaring inflation. Indeed, a discount rate of 5.5%, a monstrous jump from the current 0.75%, was imagined.
This plot for rates has always seemed absurd. A dead-end result would certainly require the Bank to use common sense and go beyond the scope of its anti-inflation mission. Protecting jobs and growth would become the priority, as far as its mandate allows, meaning there is no short-term increase in the cost of borrowing.
Thank God, then, Gertjan Vlieghe, one of the Bank's rate-setting officers, is vigilant. "In the case of a non-agreement scenario, I consider that a relaxation or a prolonged pause in monetary policy is more likely to be the appropriate policy response than". a tightening, "he said in a speech Thursday. Well, absolutely.
Governor Mark Carney has sometimes been unfairly criticized for his comments on Brexit, but this November document was not his hour of glory. Even his colleagues now seem to think that the "worst case scenario", with soaring interest rates, has been exceeded. An exit without agreement would be bad enough. there was no need to exaggerate.
AstraZeneca finally proves that it was right to reject Pfizer
You see, AstraZeneca was right to cancel Pfizer's offer in 2014. The British pharmaceutical giant is once again showing sales growth, for the first time in a decade, as CEO Pascal had promised. Soriot. In the last quarter of 2018, product sales increased 8%, thanks in particular to the new anti-cancer drugs Tagrisso and Lynparza.
Skeptics might oppose it, which would be a good point. Shares, up 7% on Thursday, have just eliminated £ 60 convincingly, while Pfizer was talking about offering £ 55 half a decade ago. Consider the time value of money, as the investment banks say, and you could build an argument that the shareholders would have done better to take Pfizer's money and shares.
But that would not be the right way to look at things. Drug development is a long-term game. It may take up to 10 years for the early-stage compound to be marketed, and the reinvention of the AstraZeneca pipeline should be considered on similar horizons. The expiration of the patent of the old cholesterol-based drug Crestor, which was the subject of cholesterol blockbuster, was right in the group recovery was never going to happen quickly.
In 2014, Soriot's main promise was that the group achieved annual sales of $ 45 billion (£ 35 billion) in 2023, which still seems a bit optimistic given that the total for 2018 was $ 22 billion. But he sticks to the target and, as the rising stock price now indicates, the market thinks AstraZeneca will at least get close now to the fact that it has new drugs on the market and that others will follow.
Soriot remains one of the most rewarded bosses of the FTSE 100: his £ 9.4m in 2017 and £ 13m in 2016 were rewards for his previous success, as rebel investors claimed. But this commercial success may finally finally appear (God knows what he will collect when he does), which is clearly good news for the British life sciences sector.
AstraZeneca has yet to convert its new business momentum into additional profits and then reward the patient shareholders with a better dividend. But to reject Pfizer was undoubtedly the right choice.
Keep up with making bridges and widgets, no bad acronyms
Oh, God, the venerable Federation of Engineering Employers, or EEF, is changing its name. He wants to be known as Make UK in the future. Do engineers try to invoke Trump's British style vision to make the UK even better or have they succumbed to the horrible habit of turning verbs into nouns? Whatever the explanation, the new name is ugly.
The EEF is clearly not a student in newspaper style either. At the second mention, Make UK can become MUK, as in "Where there is MUK, there are horns".
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