Brexit: A Two-Minute Guide

market analysis

By

Paul Ashworth, Managing Partner
David Clark, Director
Tristan Bowman, Manager


Posted 21 October 19

With the sudden uplift in Brexit activity, we have put together a two-minute guide to the current position and the likely outcomes for Brexit.

Background:

Parliament was called into sitting on Saturday for the first time since Falklands war, as Boris Johnson returned from EU trade talks with a divorce agreement. The initial intent was to have a ‘meaningful vote’ on the proposed agreement, allowing the government to then pass legislation and leave the EU by the 31st of October – a deadline that Johnson has staked his political capital on.

What happened over the weekend:

Members of parliament – notably Oliver Letwin – feared that if a ‘meaningful vote’ on Brexit was passed, the government could then fail to implement the necessary legislation to put it into law by 31st October, thereby resulting in a no deal Brexit by default.

To prevent this outcome, parliament passed the Letwin Amendment that requires the government to pass the legislation prior to the ‘meaningful vote’. The successful amendment effectively delayed the scheduled ‘meaningful vote’ from Saturday to later this week, providing time for the Government to introduce the required legislation on Monday.

Where to from here:

The law states that the Government is required to ask the EU to extend the Brexit deadline from the 31st of October to a later date – the 31st of January. Prime Minister Johnson has paid lip service to this requirement by accompanying the letter requesting an extension with a second letter recommending that the EU reject this request.  

This will allow Johnson to frame the ‘meaningful vote’ on his Brexit deal as a choice between an orderly exit that respects the wishes of the majority of voters, versus continued uncertainty, a general election – which polls indicate the Conservatives would win – and the (very) real possibility of a no-deal Brexit on January 31st 2020.

The Final word:

As with all things Brexit, the landscape has the potential to rapidly change, and we will continue to keep a close eye on developments. For now, the UK economy and the pound can take a little more comfort that the chances of a no deal Brexit on the 31st of October has reduced and a resolution is inching closer.

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