Similar to Q1, economic activity in Q3 will be driven by contingency stockpiling ahead of the 31 October Brexit deadline. The Bank of England Q3 survey showed that one in six companies felt it is not ready for a “Hard Brexit”, i.e. a WTO trade regime from early November, up from just below one in ten previously. Almost 20% of the firms said they planned to do more contingency planning, down slightly from 25% in the July survey. However, more than 30% of firms said they were changing arrangements for haulage and/or ports, more than in previous surveys. While we expect a last-minute extension of Article 50 until mid- or Q3 2020, the risk of a “Hard Brexit” remains high (40%). We expect a technical recession at the turn of the year on the back of contingency stockpiling resorption. Overall, GDP growth should be weak in 2020 (+0.8% after +1.2% in 2019). Investment intentions in the next 12 months turned negative in Q3, for the first time since 2009, due to lower demand and tighter credit conditions.
