With about 20 days left until the UK is set to officially depart the EU, the suspense is reaching fever pitch. Everyone from the head traders in the City of London to the taxi drivers is still unable to call whether the UK will be able to pass a deal. Or rather, whether the UK will indeed depart the EU at all.
Ahead of the deadline, however, there are a few important dates to keep in mind. Following the historic defeat of her first Brexit bill in parliament, May put an amended bill before UK policymakers, which was once again turned down.
This time, parliament voted on the amendments to be made. This has May working once again to deliver a solution that could gain parliamentary backing.
The issue which remains the breaking point for negotiations is that of the Irish backstop. The UK is currently seeking legal binding changes to ensure that physical customs checks are not carried out on the border of Northern Ireland.
However, so far, the EU has not been happy with any of the suggested amendments and is urging the UK to find more suitable solutions.
March 12th & Possible March 14th Vote
May is scheduled to hold a further vote in parliament by March 12th at the latest. There is some speculation that she will look to take parliament by surprise and hold the vote early.
If parliament turns down the bill again, they will vote once more on March 14th. This time, the vote will determine whether the UK government should press ahead with a no deal Brexit, or whether it should seek an extension of the Article 50 process.
No Deal Brexit
If the vote favors a no deal Brexit, the immediate market shock to such a decision could be severe. This would pave the way for a greater sell-off in GBP and UK assets when the UK officially leaves the single customs union on March 29th.
Indeed, the OECD warned this week that a no deal Brexit could have disastrous consequences. This would not just be the case for the UK, but also the EU and the UK’s broader trading partners.
Article 50 Extension?
If parliament votes for an extension to the Brexit deadline, this could cause a wave of relief across asset markets. For now, we can’t know how long an extension the government would want. However, some players sense that it would likely drag on far longer than original projections. This would then maintain the status quo until they can reach a deal. In such a case, the upward effect on GBP and UK assets is likely to be strong indeed. This is because investors will have avoided the chaos of a no deal Brexit.
However, we should note that even if the UK parliament votes for an extension, the EU could still refuse to grant it. That would mean that the UK could still end up leaving the EU without a deal. However, this appears to be the outside scenario as the EU wouldn’t want to enter into the turmoil of a post-Brexit world willingly.
For now, negotiations continue. And the market awaits the outcome of the upcoming UK vote which will pave the way for the next steps. Investors and citizens alike will be hoping that the government can secure a deal and press ahead with an orderly Brexit. But, for now, chances are still split on a knife edge.