Next week in the UK, the critical event will be related to Brexit with key votes at the Parliament. According to analysts from Danske Bank, the most likely scenario is a rejection to May’s plan and an extension of Article 50.
Key Quotes:
“Everything is about the three key Brexit votes taking place next week. On Tuesday 12 March, the House of Commons will vote on a full Brexit deal (which is expected to be finalised with the EU27 on Sunday or Monday ahead of the vote). If it is voted down, the House of Commons will vote on whether it can support a no deal Brexit on Wednesday 13 March. If it also fails, the House of Commons will vote on whether to ask the EU27 for a short (2-3 month long) extension of Article 50 on Thursday 14 March.”
“Our base case is May’s deal will be rejected again (only 15% probability it will pass), that the House of Commons cannot support a no deal Brexit (95% probability) but will force May to ask for an extension (95% probability), which we expect the EU27 leaders to accept. The question is whether the EU27 leaders can support only a short extension, as it has hinted it prefers a longer one.
“In terms of economic data releases, the most interesting one is the monthly GDP release for January on Tuesday. Based on the PMIs, growth in Q1 19 seems to be just 0.0-0.1% q/q. However, given the large drop in December, we would not be surprised to see a print to the high side.”
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