Theresa May’s spokesperson has confirmed Brexit Secretary Stephen Barclay will meet the EU’s chief Brexit negotiator Michel Barnier to discuss discuss alternative arrangements to the backstop.

In addition, the prospect of Labour voting for a Brexit deal became more likely after the party softened its red lines and indicated it would work with the government to achieve the right agreement with Brussels.

According to a Reuters poll of institutional strategists and analysts conducted between January 31 and February 5, the pound could rise to levels above 1.16 in a year’s time, and as high as 1.40 against the dollar.

Reuters correspondent Jonathan Cable said: “Reuters polls of economists have consistently indicated that they expect Britain and the European Union to eventually agree on a free trade deal.”

Output was down 0.4 percent on November and in huge contrast to a forecast from Reuters for an increase of 0.7 percent.

The Dax in Frankfurt ended 2.6pc lower on Thursday, with Deutsche Bank plunging 6pc and Daimler and the steel group ThyssenKrupp both down 5pc.

Last week, the country’s manufacturing sector plunged into contraction territory, dropping to 49.7 points in January from 51.1 in December, according to the latest figures from IHS Markit.

The economy also shrunk by 0.2 percent in the third quarter, largely due to a continued fall in the lucrative German car sector, with Deutsche Bank expecting the same contraction for the start of 2019.

Citigroup has predicted a technical recession, fearing headline impacts could trigger a further slump in confidence.

Christian Schulz from Citigroup said the German finance ministry was looking at tax cuts worth 0.1 percent to 0.5percent of GDP, but not until July.

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Global trade tensions, particularly between the US and China, as well as uncertainty around Brexit, have been cited as significant problems for the German economy.

Deutsche Bank economist economist Sebastian Becker said in a report: “The start of the German economy into 2019 has been a major disappointment so far.

“The development of several key cyclical indicators is telling us that the German economy is drifting towards recession right now.”



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