Chief economist update: Brexit - the news that was

"MPs voted to give third reading to the Withdrawal Agreement Bill (WAB) by 330 to 231 - a majority of 99 - which allows the bill to sail through to the House of Lords where peers will begin line by line scrutiny next week."

This the latest news from The Independent, headed "Boris Johnson news: Brexit legislation passes Commons..."

News? Brexit has become less of a news item since 12 December 2019 when the Conservatives won 365 seats -- majority of 80 seats, the largest since the 1987 polls - in the UK's 650-seat House of Commons.

Assuming WAB passes the upper house, which it would, the UK will be formally out of the EU on January 31 this year before going on a transition period that'll conclude on 31 December 2020.

The BBC explains: "During this period the UK will effectively remain in the EU's customs union and single market - but will be outside the political institutions and there will be no British members of the European Parliament" and by this time next year, the UK would be completely divorced from the European Union (EU) with, or without, a deal.

For sure, the most favourable outcome would be to Brexit with a mutually-beneficial deal. However, there will still be bumps in path leading to Brexit.

The Independent reports: "EU chief Brexit negotiator Michel Barnier issued Mr Johnson with a fresh warning over the possibility of the UK crashing out of the bloc "without any arrangements" if a trade deal cannot be done by the end of 2020."

Who cares? At least now Brexit uncertainty has been removed (with or without a deal) and this time, backed by the UK Parliament at that.

Bank of England (BOE) governor Mark Carney cares.

In his speech at the BOE's Future of Inflation Targeting Conference in London, Carney remarked: "The economy has been sluggish, slack has been growing, and inflation is below target. Much hinges on the speed with which domestic confidence returns. As is entirely appropriate, there is a debate at the MPC over the relative merits of near term stimulus to reinforce the expected recovery in UK growth and inflation."

Needless to say, the strength (or otherwise) of the UK economy relative to the EU would partially dictate the outcome of the Brexit negotiations over the next 12 months.

Carney has every right to be concerned. The annual growth in UK GDP has slowed from 2.0% in the March quarter of last year to 1.1% in the September quarter (latest). Similarly, headline inflation has decelerated from last year's high of 2.1% to 1.5% (November 2019) and core inflation 1.9% (2019 high) to 1.7% (November).

Carney is taking no chances, telling his audience that the UK central bank has scope to "at least double" its August 2016 package of £60 billion (US$113 billion) of asset purchases.

This is equivalent to around a 100 basis point reduction in the Bank Rate - currently at 0.75%.

Link to something sVso6ioH