As for Brexit, we continue to expect that the UK will have an FTA with the EU by end-2021, and successful negotiations with third-party countries.

According to our calculations, the aggressive trade policy pursued by the UK could lead to a +2.2% increase in import prices over a year, and be negative for competitiveness abroad. For the UK, labor costs and productivity matter more.

For imported consumption goods, prices are expected to rise by +2.3%, resulting in a +0.7pp increase in inflation, given an average of 30% import intensity in consumption.

For intermediate goods, the expected price increase will be higher: +2.5% under our trade and currency assumptions - and +10.2% for a Hard Brexit – indenting corporate margins further.