US President Donald Trump is looking into restructuring the more than $1 trillion U.S. trade relationship with the European Union, anticipating a major trade war as the global economy slows and he seeks re-election. Trump, who has long complained that the EU’s position on trade is “worse than China,” told U.S. governors that the EU is next on his agenda after signing a Phase 1 deal that cooled a bitter trade war with China. European officials say they are willing to work with Trump to address some issues but they warn that they will retaliate against any U.S. move to impose tariffs on cars and other products, as Trump has threatened. The EU was the top U.S. export market in 2018 led by aerospace products and computers. A scaled-down deal could include enhanced market access for European apples and pears, on one hand, and U.S. seafood, on the other.
Britain wants a stable relationship with the European Union for “decades to come” in financial services, finance minister Sajid Javid said, only to receive an instant rebuttal from Brussels. Britain left the EU last month and its large financial services sector might lose privileged access to EU customers from January 2021 in the event of no deal. Financial firms would be able to service those clients only in sub-sectors where rules are deemed “equivalent”, a reference to the bloc’s system of financial market access, based on Brussels acknowledging that UK regulation is as robust as the EU’s. However, EU chief Brexit negotiator Michel Barnier said London should be “under no illusion” on financial services as there would be “no general, global, permanent equivalence” with Britain. Brussels can in theory scrap access with just 30 days’ notice in some cases. Britain and the EU have agreed to make such an assessment by the end of June but Brussels says actual financial market access will be linked to broader trade issues such as fishing rights. Equivalence is used by countries such as Singapore, the United States and Japan, but it has never been applied before to a huge financial centre on the EU’s doorstep.
Ireland’s central bank advised the next government not to add to demand in the fast growing economy, a warning against the kind of spending plans analysts say are likely to emerge following last Saturday’s national election. The left-wing Sinn Fein Irish nationalist party surprisingly secured the most votes, marginally ahead of the centre-right Fine Gael and Fianna Fail, with weeks of negotiations likely needed to cobble together a majority. Sinn Fein is pledging to commit more to both current and capital spending which prompted some global rating agencies to flag a possible shift in policy. While Ireland’s economy has grown faster than any other in the European Union for six straight years, the election campaign highlighted deep frustration over deficiencies in healthcare and the high cost and low availability of housing. The central bank revised up its forecast for gross domestic product growth for 2019, expecting data to confirm that the economy grew by 6.1% last year, above the 5% it had forecast in October. Expectations for GDP growth in 2020 and 2021 were also revised upwards to 4.8% and 4.2% versus forecasts of 4.3% for 2020 and 3.9% for 2021 three months ago. The forecasts assume that a new post-Brexit EU-UK trade agreement will be in place from January 2021.
Oil prices extended gains as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover from the epidemic. Brent gained over 2%, up $1.22, at $55.23 per barrel while U.S. West Texas Intermediate rose 1.04$ to $50.98 a barrel. Travel restrictions to and from China and quarantines have cut fuel usage. The two biggest Chinese refiners have said they will reduce their processing as a result of the consumption drop, by about 7% of their 2019 processing runs. U.S. crude inventories rose by 6 million barrels in the week to Feb. 7 to 438.9 million barrels, data from industry group the American Petroleum Institute showed. Demand worries flipped the oil market into a contango last week, a market structure where prices for near-term contracts are lower than those for later contracts, indicating ample supplies.