Monday, 20 March: A spokesman for U.K. Prime Minister Theresa May today announced Britain will notify the European Union of its intention to leave the bloc on the 29 March by triggering Article 50 of the Lisbon Treaty next Wednesday. The impact of the announcement rocked sterling as it fell approximately -0.60% & -0.51% lower against both the dollar and the euro at the time of writing, but tipped the FTSE 100(+0.07%) and FTSE 250(+0.30%) slightly higher as equity investors took comfort in the certainty the announcement provided. Mrs May’s letter to the European Council will mark a key moment in Britain’s path out of the EU, setting in motion the unwinding of a 40 year relationship, and setting the clock on the two year countdown to leave the single market. Seemingly, the effects of a departure from the EU have already been noted by some on the continent, as Champagne exports to the U.K. fizzed out falling 14% in euro-denominated terms, and by 8.7% in volume terms as sterling found itself 12.5% lower in the wake of the EU referendum. Despite a small population, Britain is a big drinker in the Champagne stakes, second to only the U.S. as the second-biggest export market by revenue, and the largest by volume.
Despite being one of the major stock stories of the day, the news of Vodafone’s agreement to merge its Indian subsidiary with rival domestic carrier Idea Cellular did little to excite investors as the stock closed -0.61% lower. News of the potential deal was first confirmed by Vodafone at the end of January, but the merger is not expected to complete until 2018, subject to regulatory approval, identified as the main stumbling block to complete the deal by sector analysts at Berenburg. Vodafone commented that it would be a “merger of equals”, with joint control of the company between Vodafone and Aditya Birla, governed by a shareholder agreement. It is expected that the two companies will be able to realise sizeable cost and capital expenditure synergies of US$10bn, and estimated annual run rate savings of US$2.1bn on an annual basis by the fourth full year after completion.
Across Europe, indices were mixed as the FTSE 100 closed +0.07%, the DAX 30 -0.35%, and the CAC 40 -0.34%.