Headwinds for a Brexit trade deal are rising

Yesterday, a UK government fresh legislation proposal – the Internal Market Bill – led to heated discussions in the House of Commons. According to the UK government, the bill is intended to guarantee the smooth functioning of trade and prevent disruptions between the four nations of the UK, if no deal is reached with the EU by the end of this year’s transition period.


  • Yesterday evening, the UK House of Commons voted in a second reading on the controversial Internal Market Bill. Despite some high profile Tory MPs opposition, the bill secured a comfortable majority of 77 votes (340 to 263). A next reading with possible amendments will come next Tuesday. The bill also needs the consent of the House of Lords, which looks shaky for now.
  • The EU already issued an ultimatum to withdraw this legislation by end of September or the UK to face legal consequences. The fresh legislation undercuts provisions of the Northern Ireland Protocol of the Brexit Withdrawal Agreement.
  • As UK PM Johnson defended the legislation, both parties look set to be on a clash course. Although the legal consequences draw on the Withdrawal Agreement and are not directly connected to the ongoing trade negotiations, the issue nevertheless sours the mood and undermines trust. Currently, we judge the likelihood of a Brexit trade deal at 50% at best.

Download the full publication below



US President-elect Joe Biden has unveiled a $1.9 trillion stimulus package proposal. Following the recent increase in cases, China has imposed new restrictions and lockdowns in the Hebei province. Canada has implemented new restrictions and a provincewide curfew in Quebec that will last until February 8. German Chancellor Angela Merkel warned that the recent rise in Covid-19 cases could force the country to prolong the nationwide lockdown until April.
Video Outlook 2021: Repair and Despair
Watch the Outlook video with Vincent Chaigneau, Head of Research at Generali Investments
US: Fiscal stimulus to boost GDP growth to 5.5% in 2021
The thin majority in the Senate will allow the incoming administration to deliver quickly a sizeable fiscal stimulus. We expect a package worth around US$ 800bn (on top of the US$ 900bn already agreed on in December), centred on the strengthening of direct income support to households, extended unemployment benefit and aid to local governments.