Brexit deal vote Preview: Chances are low for the Brexit deal to pass in UK parliament
|- Enforcer in UK Prime Minister May's Conservative party Gareth Johnson quits the day before the Brexit deal is voted in the UK parliament.
- The UK’s March 29 exit from the EU is uncertain as parliament is likely to reject Theresa May’s deal on Tuesday vote, opening up outcomes ranging from a disorderly divorce, early elections or even no Brexit at all.
The Brexit chaos continued on Monday with the UK Prime Minister Theresa May warning the members of parliament of supporting the Brexit deal as is or face political chaos with only 73 days left before the UK officially exits the European Union on March 29. At the top of it, the enforcer of the UK Conservative party Gareth Johnson said he quits the UK government the day before the meaningful vote in the House of Commons on Tuesday.
“While no-deal remains a serious risk, having observed the events at Westminster over the last seven days, it’s now my judgment that the more likely outcome is paralysis in parliament that risks there being no Brexit,” Theresa May said in her speech in Stoke-on-Trend on Monday.
The chances are low for the May’s Brexit deal to pass in the House of Commons in a meaningful vote on Tuesday, January 15 with consequences ranging from disorderly divorce, early elections or even no Brexit at all.
The opposition Labour party leader Jeremy Corbyn said he would seek a no-confidence vote to May’s government after she loses the Brexit deal vote in parliament. That would throw Britain into another round of political uncertainty in the final phase of Brexit. Theresa May can also call early elections herself, or ask to delay Brexit date.
Ther European counterparts seem to be prone to such eventuality with the Austrian Prime Minister Kurz saying that with Brexit stalemate the options are to delay Brexit date. Spain also said it would support a delay until the European Parliament elections are held in May, giving the UK six more week the set Brexit up.
In an effort to get the Brexit deal passed, the European Commission President Jean-Claude Juncker and the European Council President Donald Tusk send a letter of support stressing EU’s strong commitment to try and reach a post-Brexit trade deal by the end of next year in order to avoid the Irish border backstop.
The EU officials confirmed in a letter that even if the target date were not met, the UK still has an option of extending a status-quo transition period to avoid triggering the backstop.
All in all, the orderly Brexit is set to materialize only if the UK parliament will vote for the Brexit deal on the table. The option of a no-confidence vote triggered by the government itself or by the opposition Labour party is set to increase the political and market uncertainty while delaying the Brexit date would be seen as a temporary relief.
Brexit scenarios and GBP/USD impact:
- Brexit deal rejected with a no-confidence vote - Sterling negative
- Delaying the Brexit date -Sterling neutral-to-positive
- No-deal Brexit - Sterling strongly negative
- Brexit deal approved - Sterling positive
- No Brexit - Strongly Sterling positive
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