March 13, 2019

UK flirting with the abyss

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In Short

Yesterday evening, UK PM Theresa May lost the second meaningful vote on the EU-UK withdrawal agreement again by a wide margin. Today, we expect the British Parliament to reject a no-deal Brexit, followed by a vote to extend the Brexit date tomorrow.
UK flirting with the abyss
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Highlights:

  • Yesterday evening, UK PM Theresa May lost the second meaningful vote on the EU-UK withdrawal agreement again by a wide margin. Today, we expect the British Parliament to reject a no-deal Brexit, followed by a vote to extend the Brexit date tomorrow.
  • Compared to the situation after the first meaningful vote, further negotiations with the EU look unlikely to bring any break-through. Thus, a solution will rather depend on the British Parliament.
  • According to press reports, hard Brexiteers openly prefer a no-deal exit. Thus, the Conservative party plus its coalition partner DUP look unlikely to get the deal passed on their own. Bipartisan action has proven difficult so far, but is still a distinct possibility.
  • The situation has become very fluid again. Among alternative solutions (second referendum, fresh elections, softer Brexit. revocation of Article 50) a new referendum might be the “easiest-to-reach” bipartisan compromise.
  • The EU is increasingly demanding a viable reason to delay Brexit (which needs a unanimous approval), implicitly also forcing the UK to explore fresh routes for a deal to pass.
  • Yesterday’s decision has increased the likelihood of both extremes, a crash Brexit and no Brexit. An accidental outcome cannot be excluded, but we still consider a benign outcome as more likely than not.

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UK FLIRTING WITH THE ABYSS

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