In a poll by the Observer newspaper nine out of ten of Britain's top economists believe the economy will be harmed if Britain leaves the EU. The poll found that 88% said an exit from the EU and the single market would most likely damage Britain's growth prospects over the next five years and 82% said there would probably be a negative impact on household incomes, whilst 61% also think unemployment would rise. Just 4% of respondents thought Brexit would have a negative impact on GDP. Reasons cited as to why the UK would suffer were loss of access to the single market (67%) and increased uncertainty leading to reduced investment (66%). Another Brexit poll by YouGov says that the Leave and the Remain campaigns were neck and neck with 41% of respondents voting for each outcome. This has led to a Sterling sell off as pre referendum jitters set in and confidence of a Remain vote eroded. In May, Britain's services picked up after dropping to a three-year low in April, the upcoming “Brexit” referendum still weighing heavily on new business and hiring. Markit's services activity index rose to 53.5 in May from 52.3 in April. Markit chief economist Chris Williamson stated that "Growth has collapsed in manufacturing and construction, leaving the economy dependent on the service sector to sustain the upturn". The survey also reported one in three companies are suffering from the uncertainty created by the referendum, suggesting the economy could rebound if the country votes to stay in the EU.
Preliminary GDP figures from the US came in below expectations, at 0.6% for Q1. However, St. Louis Federal Reserve President James Bullard said global markets appear to be well-prepared for a summer interest rate hike from the Fed, although he did not specify a date for the policy move. Bullard added a rebound in U.S. GDP growth seems to be materialising in the second quarter, but reserved his opinion on whether the Fed should hike in June or July for the next policy meeting. CB Consumer Confidence fell from 96.1 to 92.6 highlighting that households have a less positive outlook on the US economy. However, consumer spending jumped by 1% in April, the largest month-on-month gain since August 2009. This is significant given that consumer spending accounts for two thirds of the US economy. New claims for US unemployment insurance fell to a five week low last week, pointing to a tightening jobs market. The U.S. economy created the fewest number of jobs in more than five years in May as employment in the manufacturing and construction sectors fell sharply, suggesting a deterioration in the labour market that could make it harder for the Federal Reserve to raise interest rates in June or July. Employers hired 59,000 fewer workers in March and April. While the unemployment rate fell to 4.7% in May, the lowest since November 2007, that was in part due to people dropping out of the labour force. The Fed bank intends to raise rates soon if job gains continue and economic data remain positive.
Greece has told its European and IMF creditors it cannot implement some of the extra changes sought in exchange for fresh bailout loans. Lenders also gave the green light for the disbursement of 10.3 billion euros in tranches, on condition that Athens amends laws concerning pensions, privatisations and freeing up the sale of bad loans. However, this disagreement could further delay the release of the bailout funds Athens needs to pay off IMF loans in June. Germany, released its monthly unemployment data, which showed that unemployment declined more than expected to a figure of 2.695 million in May. The European Central Bank kept its monetary policy on hold and interest rates unmoved, with its deposit facility at minus 0.4% and its quantitative easing package at €80bn a month. The ECB, confirmed they will start buying corporate bonds as part of its quantitative easing package next Wednesday, as the Bank kept monetary policy on hold. In March, the ECB upped its monthly purchase of bonds from €60bn to €80bn and said it would extend the program to include corporate bonds to push yields even further across the single currency bloc. ECB President Mario Draghi took the opportunity to call on UK voters to reject Brexit and choose to stay in the EU. Growth in the European economy remained subdued in May suggesting that the continent's recovery is still struggling to get out of "low gear".
