Finally, business leaders have been expressing their concern and barely-contained anger over the Brexit crisis.

As the Institute of Directors puts it, Brexit is a merry-go-round that long ago stopped being fun (was it ever?!)

On that note, goodnight! GW

The FTSE 100 has ended the week up 45 points, at 7279.

Investors should recognise that the chances of a general election have risen, says Dean Turner, UK Economist at UBS Global Wealth Management.

“The third defeat of the Withdrawal Agreement crystallises the UK’s departure date as 12th April. Before then, we expect MPs to converge on the view that more time will be needed in order to determine the path for Brexit. Therefore, a long extension to Article 50 looks increasingly likely, boosting the chances of a general election.

“Sterling hasn’t responded favourably to today’s result, likely interpreting an increased risk of a no-deal scenario two weeks hence. That said, our view remains that MPs will ultimately avoid this outcome.”

Mervyn King, who led the Bank of England in the run-up to the financial crisis, has argued that Britain shouldn’t fear a no-deal Brexit...

The London stock market shrugged off the drama in Westminster, leaving the FTSE 100 up 36 points today at 7270.

Analyst Fiona Cincotta of www.cityindex.co.uk says trade war optimism is helping markets, following Treasury secretary Mnuchin’s claim of ‘constructive progress’ at today’s talks.

However, she also cautions that we don’t know exactly what’s being agreed (if anything).

Optimism that the US and China were moving towards a trade agreement has boosted risk appetite. Whilst any agreement could still be some months in the making, Economic Advisor Larry Kudlow hinted that some tariffs on Chinese imports could be removed. Progress in the US – Sino trade dispute is ensuring a strong end to the quarter for equities, despite lingering concerns over the health of the global economy.

We have seen investors pile into riskier assets across this quarter thanks to positive trade talk developments and a more accommodative Fed. Whether the bulls stay in control in the coming quarter could depend largely on further developments in US – Sino trade talks. Particularly amid a lack of solid evidence.

Jeremy Thomson-Cook, chief economist and head of currency strategy at WorldFirst, predicts that the pound will hover around $1.30 until we have some Brexit clarity.

GBP-USD is now at its centre of gravity around the $1.30 mark and that is where we expect it to stay until the next catalyst, which will likely be the second round of indicative votes next week.”

As predicted, the US stock market is ending the week with gains - following the rally in China and then Europe today.

The Dow Jones industrial average is up roughly 100 points, or 0.4%, at 25,815 points. At that level, it’s up almost 11% so far this year.

Better economic news from the US: Nearly 5% more Americans managed a house in February, reversing most of the slump in January.

Newsflash: The Chinese news service Xinhua is reporting that progress was made at today’s negotiations between US officials Steven Mnuchin and Robert Lighthizer and Chinese vice premier Liu He.

Alas, we don’t have concrete details on that progress.

Back in the financial markets, Wall Street is expected to open higher as trade war optimism reaches New York.

Investors are cheered by this morning’s tweet from Treasury secretary Steven Mnuchin, that his talks in Beijing today were ‘constructive’.

TUC General Secretary Frances O’Grady is urging ministers to address the weakness in Britain’s economy.....

“Falling business investment, a low savings ratio and record unsecured household debt are very worrying – especially with growth already so weak.

“The government must get off the sidelines and take urgent action to protect livelihoods and the economy.

“We need more investment in public services and infrastructure to counter the slowdown. And ministers should support families by raising the minimum wage to £10 and ending the benefits freeze.”

The harsh impact of the benefits freeze (now entering its 4th year) was highlighted yesterday by government data showing that child poverty has risen in the last year:

Economist Howard Archer of the EY Item Club is thoroughly unimpressed by today’s healthcheck on the UK economy:

• The expenditure side of the economy was largely unappetizing in the fourth quarter with business investment falling again and at an increased rate, net trade negative and consumer spending growth slowing.
• GDP growth in the fourth quarter was held back by a disappointing and worrying fourth successive contraction in business investment which fell at an increased rate of 0.9% quarter-on-quarter causing it to be down 2.5% year-on-year. This undoubtedly reflected heightened Brexit uncertainties. Meanwhile, net trade made a modest negative contribution to fourth quarter growth as import growth of 2.1% quarter-on-quarter out-stripped export growth of 1.6% quarter-on-quarter

In another blow, Britain has also suffered a fall in gross fixed capital formation (a broad measure of spending on new equipment, machinery, transport, property, etc).

GFCF shrank by 0.6% in the last quarter of 2018, today’s growth report shows. It was mainly dragged down by the drop in business spending.

This is the third quarterly decline in a row -- which hasn’t happened since 2009 (after the financial crisis).

It means Britain invested less in these assets (which are crucial to future growth) than any other G7 member....

John McDonnell MP, Shadow Chancellor, is (predictably) unimpressed by the picture painted by today’s economic data.

He says:

“Amidst the Government’s Brexit bungling, the Chancellor has repeatedly failed to get a grip on tumbling business investment, high household borrowing, weak growth, and a widening current account deficit.

“We need a general election to bring an end to the Tories’ chaotic management of Brexit and reckless economic management.”

McDonnell might get his wish; there’s speculation that Britain could head back to the polls this year.

Britain also continued to rely on the ‘kindness of strangers’ to support its financial position.

The UK’s current account deficit widened to 4.4% of GDP in the final quarter of 2018, the ONS says.

Interestingly, this was due to “a large net inflow of portfolio investment into the UK”. IN other worse, foreign investors bought more UK assets in the last few months of 2018.

Mark Tighe, CEO of R&D tax specialists Catax, says the “hideous and ongoing uncertainty over Brexit” is the main factor driving business investment down:

“This is the first time we’ve seen business investment crumble so badly since the financial crisis. It is a clear sign of dwindling business confidence and highlights the growing need for the UK economy to be put on a firmer footing.

Is it fair to blame Brexit for the steady fall in UK business investment in 2018?

Yes, according to this line from today’s National Accounts report:

The latest Deloitte CFO Survey reports that perceptions of economic and financial uncertainty continued to rise in the final quarter of 2018 while the outlook for capital expenditure has deteriorated.

Recent analysis by the Bank of England finds that “almost 70% of the slowdown” in business investment could be accounted for by uncertainty around the UK’s EU exit.

But...it’s also worth noting that business investment growth since the crisis had been modest, compared to previous post-recessions periods.

This doesn’t sound good....

In 2016, households financed their borrowing through long-term loans and the disinvestment in mutual funds. More recently, there has been a sharp drop in deposits made to UK banks by households, while the net acquisition of long-term loans and the disinvestment in mutual funds continued throughout this period to help fund households’ net borrowing.

Economist Rupert Seggins shows how UK households turned from net savers to net borrowers in the final quarter of 2016 (when the pound’s tumble after the Brexit vote pushed inflation higher)

Once again, Britain is relying on its service sector for growth.

Services expanded by 0.5% in the last quarter of 2018, while production shrank by 0.8% and construction output fell by 0.5%.

Asian markets have continued to rally, on hopes that the ‘constructive talks’ between the US and China will deliver the goods.

Here’s AFP’s take:

Shanghai surged 3.2 percent and Tokyo ended 0.8 percent higher, while Hong Kong added one percent.

Seoul and Singapore each added 0.6 percent, Sydney put on 0.1 percent and Wellington gained 0.8 percent. Taipei, Mumbai and Manila were also sharply higher.

“Risk assets are being supported right now, in my view, by a dovish Fed, a China stabilisation and better sentiment around geopolitical risks,” Frances Donald at Manulife Asset Management told Bloomberg News.

“That probably gives this rally a little bit more juice.”

Despite TUI’s profits warning, European stock markets are higher across the board.

Neil Wilson of Markets.com says Steven Mnuchin’s tweet has cheered investors, as they wrap up the first quarter of 2019:

“US 10-year Treasury yields are at 2.39%, still on the back foot but off the weekly lows. Equity markets are displaying a bit more optimism again. There is some hope flickering again in terms of trade as Mnuchin and Lighthizer arrive in Beijing for more talks – a tweet this morning saying that these talks were ‘constructive’, with the Chinese vice-premier Liu He set to head to Washington next week for ‘important’ talks.

A nice excuse to bid up markets on the last day of the quarter if ever there was one.

Mining stocks are rallying in London in early trading, as trade war optimism bubbles away.

Glencore, BHP Billiton, Rio Tinto and Anglo American have all gained at least 2%, driving the FTSE 100 up up 45 points or 0.6% to 7278.

Here are some photos of the US delegation arriving for today’s ‘constructive’ talks: