|

The Many Lives of Brexit

British Prime Minister Theresa May's Brexit deal survived a series of close votes in the House of Commons on Thursday.

It advanced no further towards approval but after losing two divisions in the House by large margins avoiding total defeat is a much more than a consolation prize. It leaves the Prime Minister free to bring her deal to the floor one more time. 

With a no-deal Brexit eliminated in Wednesday's vote and an extension of the March 29th exit date authorized on Thursday Ms May is betting and hoping that enough Tories and the Democratic Unionists of Northern Ireland (DUP) will change their minds in a final vote knowing that the alternative, a long delay would most likely produce a softer Brexit or no Brexit at all.

The Prime Minister has said that Brexit could be delayed by three months, to June 30th if her deal is approved by March 20th.  The additional time would be needed to pass the necessary enabling legislation.  If the deal is not passed by Parliament she has said the government will seek a longer extension, perhaps as much as two years.  Any extension has to be approved by the other 27 EU member states. 

The majority of conservative MPs and seven cabinet ministers voted against delaying Brexit, according to the BBC. The tally was 413 in favor of the motion to extend Article 50 including 236 Labour, 112 Conservatives, 35 Scottish National Party members, 11 Liberal Democrats and 19 smaller party MPs.  Against the motion were 202 MPs, 188 Conservatives, 10 DUP members, 3 Labor and 1 Independent. Not voting were 27 MPs.

Ms May has long said that the UK would leave the EU on March 29th whether or not the withdrawal was approved.  But the decision was taken from the government after two heavy rejections of her Brexit deal and the vote by Parliament to deny a no-deal departure.

Downing Street has said it is still preparing for a no-deal Brexit, which, considering the EU approval needed for an extension is still a theoretical possibility.

The choices for the Conservative and especially the Euro-skeptic, pro-Brexit members are stark.  A Brexit deal that they dislike and fear or the possibility, how large is impossible to determine, that in the long delay after the defeat to the new exit date their cause will lose all momentum to the determined and emboldened opposition to any exit at all.  Labour has endorsed a second referendum and desires a general election, that, given the defeat of the government’s signature policy it is hard to see how the Conservatives avoid.

It was always likely that such a contentious and evenly divided issue would produce a deal loved by no one and that negotiations would go down to the pressure filled end.

 Ms May’s determination to fulfill the will of the electorate and her warnings that failure would damage trust in democracy have not swayed Parliament, the majority of which probably are personally opposed to an exit, unlike the majority of their constituents.

The next week is indeed a historic one for the United Kingdom and the European Union.  The Prime Minister plans to hold a “meaningful vote” on her withdrawal deal by next Wednesday.  

If it does not pass the future relationship between the UK and the EU will immediately assume a very different shape.  

Author

Joseph Trevisani

Joseph Trevisani began his thirty-year career in the financial markets at Credit Suisse in New York and Singapore where he worked for 12 years as an interbank currency trader and trading desk manager.

More from Joseph Trevisani
Share:

Editor's Picks

EUR/USD holds steady above 1.1850 as markets eye Eurozone GDP, US CPI inflation releases

The EUR/USD pair trades on a flat note near 1.1870 during the early Asian session on Friday. The major pair steadies amid mixed signals from the latest release of US economic indicators. Traders await the preliminary reading of the Eurozone Gross Domestic Product for the fourth quarter and US inflation data, which are published later on Friday.  

GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus

The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.

Gold: Will US CPI data trigger a range breakout?

Gold retakes $5,000 early Friday amid a turnaround from weekly lows as US CPI data loom. The US Dollar consolidates weekly losses as AI concerns-driven risk-off mood stalls downside. Technically, Gold appears primed for a big range breakout, with risks skewed toward a bullish break.

Bitcoin, Ethereum and Ripple stay weak as bearish momentum persists

Bitcoin, Ethereum and Ripple remain under pressure, extending losses of over 5%, 6% and 4%, respectively, so far this week. BTC trades below $67,000 while ETH and XRP correct after facing rejection around key levels. With bearish momentum persisting and prices staying weak, the top three cryptocurrencies continue to show no clear signs of a sustained recovery.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Aster Price Forecast: Demand sparks on Binance Wallet partnership for on-chain perpetuals

Aster is up roughly 9% so far on Thursday, hinting at the breakout of a crucial resistance level. Aster partners up with Binance wallet for the second season of the on-chain perpetuals challenge.