The Monday note - 8 January 2018

• The FTSE 100 closed on Friday at 7,724.2, up 36 points on a week earlier, reflecting investor confidence on the outlook for the global economy. The ten year Gilt yield stood at 1.25%. 
• Inflation in the Eurozone fell to 1.4% in December. Continued weak inflation could result in the ECB delaying the date at which it begins to taper off its QE programme. 
• Productivity in the UK hit a six year high in Q3 2017. Out per hour expanded by 0.9% compared to the previous quarter, according to ONS. 
• A report in the Financial Times suggested that the government is considering whether to keep the UK under the regulatory oversight of the European Medicines Agency after Brexit. 

Chief Economist comments: 

According to the press, there are now government ministers backing calls from the aviation, chemicals and pharmaceuticals industries to remain under EU regulation after Brexit. Doing so would keep those industries within the remit of the European Court of Justice, thus crossing one of the Prime Minister’s ‘red lines’. I suspect a growing number of government ministers are looking at Brexit, and its short timetable, and drawing the conclusion that it is impossible to leave the EU. Brexit-in-name-only is looking the most likely outcome.