UK: Blindly running down the clock or forging a deal? - Westpac

Tim Riddell, analyst at Westpac, suggests that the 4Q’18 Treasury and Bank of England projections of Brexit outcomes should again haunt markets as the clock runs down and the 29th March Article 50 deadline approaches.

Key Quotes

“Most market commentators assume that there will have to be some form of extension to current negotiations as UK’s Parliamentary deadlock continues.”

“PM May is still pursing support for her plan and some form of EU conciliation. The outcome remains painfully uncertain.”

“May’s Government again faces Parliamentary votes to avert the risk of an unintended fall into a no-deal Brexit by extending the Article 50 deadline. Although passing this would be a defeat for the Government and could further undermine May’s standing, it might also push hardliners towards backing May’s beleaguered plan as a more favoured option to an extention of negotiations and likelihood of a softer-Brexit.”

“If the motion for a no-deal block were to be passed, and if there is no positive result for May's deal from the next Parliamentary vote on Brexit (scheduled for 27th Feb.), there would be a block on a no-deal on 13th March in conjunction with an extension of the deadline.”

“Intra-Party rifts over Brexit are not only a Tory Party issue. The Opposition Labour Party is also deeply divided and this adds to broader uncertainties.”