Brexit – You ain’t seen nothing yet - Standard Chartered

"On 11 December, the UK government will hold a ‘meaningful vote’ in parliament on its Brexit deal. As it stands, it looks as if it will lose the vote," notes Standard Chartered economis Christopher Graham.

Key quotes

" Depending on the degree of opposition in parliament over the coming days, we also cannot rule out the government pulling the vote in the next few days to avoid a significant defeat. Our core view is that a deal will eventually be passed through parliament, but there are various scenarios via which this end-state is reached over the coming weeks."

"If, as expected, the government loses its vote, it may choose to return to the European Commission to renegotiate aspects of the deal (although EU officials have warned that they will not entertain significant changes). This is more likely to involve changes to the future relationship declaration than the Withdrawal Agreement, potentially including a clearer pivot to a harder Brexit (akin to a Canada-style deal) or a softer Brexit (akin to a Norway-style deal). It is unclear how fruitful this would be as both pivots would gain the prime minister (PM) some votes while losing others."

"Instead, Conservative party rebels may see this as a perfect opportunity to oust PM Theresa May and install a new leader in favour of their vision of Brexit. Opposition Labour members of parliament (MPs) may see this as the right time to call for a vote of no confidence in the government. Some factions will try to tie the government’s hands on holding another referendum. Finally, as evidence of the parliamentary logjam becomes clearer, some MPs will see a no-deal exit as the easiest option. Our view is that this remains a considerable risk, but the current government, and most opposition MPs, would do everything to avoid this scenario. Moreover, MPs won a key vote on 4 December that gives parliament more control over what happens if the meaningful vote is lost, although we stress that this does not rule out no deal."