German Chancellor, Angela Merkel announced yesterday her preference of a snap election rather than governing with a minority government, after failing to create a coalition. The coalition talks broke down over the weekend, Merkel’s Christian Democratic Union, the Free Democratic Party and the Greens due to irreconcilable differences. The Euro has continued to tumble as the markets await President Frank-Walter Steinmeier’s decision on whether to call the snap election. If a snap election does go ahead it is unlikely to take place before February.
UK Prime Minister, Theresa May has gained backing from her cabinet ministers to raise the Brexit divorce bill offering to £40 billion. May will only be willing to present the offer to the EU if they are willing to allow the talks to move onto trade. The 27 EU members will decide at the EU summit in December, if enough has been done to allow the UK to progress to trade talks. The bullish divorce bill news has provided the Pound with some support, allowing it to inch higher against its major counter parties.
The UK Inflation Report hearing is set to take place today with the BOE Governor and several MPC members testifying before the Parliament’s Treasury Committee on the inflation and economic outlook. Across the pond, Janet Yellen will be taking part a panel discussion titled ‘In conversation with Mervyn King’ at the New York University Stern School of Business.