- Only 36 days before the scheduled Brexit date on March 29, 2019 UK PM Theresa May’s Brexit deal with the EU still lacks parliamentary approval. Overall, the current situation is very fluid.
- PM May is trying to win over the hard Brexiteers within her own party by demanding additional concessions from the EU. While the EU avoids renegotiating the withdrawal agreement, a legally binding addendum remains an option.
- PM May intends to further run down the clock, in order to present her deal as the only possible alternative to a crash Brexit. But Parliament is likely to stop that process on Feb. 27, by forcing an extension request for the Brexit deadline.
- Alternative options (e.g. second referendum, new elections or the withdrawal from Article 50) are hardly attractive.
- In sum, we still see a benign outcome of the Brexit showdown still more likely than not, as hard Brexiteers throw the towel in on the fear of a Brexit unwind and/or rebel labour MPs help the deal pass. As in any chicken game an accident cannot be excluded, but our underlying views create a positive bias towards GBP and domestic UK stocks.
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