Danske Research Team
Danske Bank A/S
Key takeaways
Our base case is now that the UK will call a snap election early next week and that this will be held after 31 October (i.e. likely in November), implying an extension of the current Brexit deadline of 31 October into next year.
While the election may not be called before mid-October, a snap election seems unavoidable and the election result will be important for the Brexit end game.
In this piece, we analyse what to expect with respect to Brexit depending on the election outcome.
Unfortunately, it is difficult to predict the outcome, as we cannot translate opinion polls directly into number of seats. Seat projections during the run-up to the 2017 election were a long way from the result.
Due to the above, we do not have a strong view on the result right now but our gut feeling says we will end up with another Conservative government or a hung parliament.
In any case, the election is going to be an EU referendum in disguise.
If the Conservatives win, perhaps supported by the DUP and/or the The Brexit Party, our base case is a no-deal Brexit.
If the Labour, Liberal Democrats, Scottish National Party (SNP) or Greens win a majority, it is likely, in our view, that we are heading for a second EU referendum. Opinion polls show remain is slightly ahead.
If we have a hung parliament where the parties are unable to co-operate, we are likely heading for another extension and snap election.
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