Brexit: PM May’s Deal May Finally Be In Sight

Following the votes yesterday, the choice is now between a short extension to Article 50 and implicit acceptance of the current deal; or a much longer extension which in effect would reset the UK’s political Brexit clock to a time before the original referendum. Pro-Brexit MPs will, therefore, have to weigh carefully whether what is on offer now represents the best deal they can get.

Separately, we note that in terms of an “accidental” no-deal exit from the EU, the ECJ has previously confirmed that the UK has a unilateral right to revoke its Article 50 notification, should it wish to do so. Furthermore, in the circumstances of the UK Parliament ratifying the Withdrawal Agreement, we see little reason for an extension request to be refused by EU member states. There is therefore limited no-deal risk from this angle in our view.

While there appears limited support in Parliament for resetting the Brexit clock or a second referendum, the challenge will be to gain sufficient support for the government’s deal at the third attempt. We note press reports that rebel Conservative MPs are continuing to assess the attorney general’s advice on the government deal, as are the DUP. It is high stakes but we still cannot rule out the UK Parliament will do the “right” thing, for investors at least, by approving the Withdrawal Agreement – after trying everything else.

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