The specter of a messy Brexit means that the outlook for British sovereign debt remains negative, ratings agencies Standard & Poor’s (S&P) and Fitch said on Friday.
Both agencies affirmed their “AA” high-grade rating on British short and long-term sovereign debt, but they pointed to the recent deadlock in Brexit talks as a reason to worry about the British economy.
Six months since authorities in London triggered the process to exit the EU, a second phase of talks on future EU-British trade relations has yet to begin.
Failure to reach an agreement could leave Britain without privileged access to the largest market for its goods and services after it leaves the union in 2019.
“The limited time left for negotiating a framework for a future relationship, along with internal divisions among British policymakers, has increased the risk of a disorderly Brexit,” S&P said in a statement.
A clear sticking point is the exit payment, or the amount of money Britain will have to pay into the EU budget to honor commitments made during Britain’s EU membership, even as it prepares to leave.
British officials appear to have offered about £18 billion (US$24 billion), while the European side favors something close to 100 billion euros (US$116 billion).
With the UK Conservative Party’s loss of its parliamentary majority in June’s elections, the British negotiating position appears less than cohesive — increasing the chances of a “no-deal” Brexit, Fitch said.
“We believe that no single post-Brexit relationship with the EU commands either majority parliamentary or popular support. This increases the uncertainty about the outcome of the withdrawal negotiations,” Fitch said in a statement.
Separately, S&P on Friday raised Italy’s sovereign rating, citing the country’s recovering economy as well as rising investment and job creation.
The ratings agency kicked Italy’s credit rating up a notch, from “BBB-”
to “BBB” — still lower-medium grade, but with a stable outlook.
S&P said the Italian economy was expected to grow by 1.4 percent this year, before averaging 1.3 percent GDP growth into 2019.
In addition to keeping its budget deficit at 2.1 percent of GDP or below, Italy has also begun bringing down its very high sovereign debt levels. Gross national debt now stands at 126 percent of GDP.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to