Rabobank analysts point out that in the UK, the Conservative party has elected Boris Johnson to be the new leader of the party and Prime Minister (PM) of the country and his first speech and cabinet appointments reflect his tough electoral rhetoric on Brexit.
“Time is a major constraint and not on the new PM’s side, who has a maximum of 6 weeks to deliver Brexit.”
“If the new UK PM opts for a hard Brexit once EU negotiations fail, he will face firm opposition from the British Parliament.”
“Such a conflict is likely to lead to an early general election, an outcome the new PM might be able to avoid by opting for a second referendum.”
“Either way, a third extension of article 50 by the EU will be necessary and we regard that as the most likely option on 31 October.”
“The odds of a hard Brexit on 31 October remain uncomfortably high.”
“In 2020 we still see the same three possible Brexit outcomes, but the odds of the three are closely tied, with an orderly Brexit being slightly more likely than a Bremain or a hard Brexit.”
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