As we head into the thick of UK-EU negotiations, it’s tough to see the detail in the fudgey murk. The BBC did its best last night with a Panorama summary of the situation, which can largely be summed up as:
- PM TM telling the country “it’s My Deal or No Deal”
- Labour’s Brexit Sec Starmer telling the country “Her Deal isn’t acceptable but neither is No Deal”
- Brexiteer Rees-Mogg telling the country “No Deal suits me punk“
Investors could be forgiven for dismissing this as noise. Except that Brexit relies upon those 650 MPs as they will have a ‘meaningful vote’ on the final deal. So for all the noises about the EU/UK negotiation, where Brexit Sec Raab tells a German newspaper this morning that the ball is in the EU’s court, and EU officials tell the Guardian they expect the UK to shift its position in its “darkest hour”, that really is just noise. What will MPs go for, with the clock ticking?
BlondeMoney is here to explain all.
Firstly, what will the deal be?
Click here for our quick and easy primer on the difference between Norway, Chequers, No Deal et al. It includes our probability for each outcome, where that would take UK asset prices, and how each might come about. We will be updating this matrix as events progress. We promise it’s easy to read. Print it out, laminate it. (Or if you’d like us to send you a hard copy, email us).
Secondly, what support does each option have in Parliament?
We have taken our analysis of each MPs ideological Brexit position and created dividing lines on our -15 (Remain) to +15 (Leave) scale by looking at what various MPs have said their red lines are. That leaves us with this chart:
But we know that ideology can go out of the window when it comes to the two masters for any MP: their leader and their voters. We have therefore gone through all Conservative Party MPs to check how many have publicly declared their support for Chequers, leaving us with this pie chart:
Theresa lacks a majority in Parliament even with this majority in her Party. She will need to rely on the support of others – and the Labour Party’s Emily Thornberry already declared they would vote against her. This threat is unlikely to apply across Labour due to the breakdown in party discipline on all sides.
Our team has further detailed analysis on the numbers for and against Chequers across Parliament. We will shortly be publishing this information which will give a clearer signal for how likely it is that Chequers can pass.
Thirdly, how do we get there?
Here is a timeline of key events in the run up to Brexit Day next March.
As you can see, we are now in the thick of the Party Conference season. This matters in that it could easily shift the arithmetic for a Deal. Momentum matters. Public opinion will start to take shape. Why else would the Prime Minister let cameras into Number 10 for a primetime TV slot?
After Conferences conclude, there are only seven days of Parliament sitting before the EU Council summit meeting. It’s no wonder everyone has decided an extra summit will be required in November.
Then into December and January it will be the time for Parliament’s Meaningful Vote.
We will be watching for:
SEPT: Alternative Plans or Credible Protests emerging against Chequers (likely)
OCT: EU shifting their position as a result (unlikely)
NOV: EU and UK ramp up threats to walk away (likely)
DEC: Parliament decides
We expect the market to respond:
SEPT: Excitement builds over a deal, +ve UK assets
OCT/NOV: Fear of breakdown followed by Euphoria over Deal
DEC: The Big Fear over Max Uncertainty as realisation descends that Parliamentary arithmetic is too tight
If you would like further details on our analysis and how it applies to you and your business, please contact us.