Analysts at Danske Bank suggest that the UK politics remain poisoned, as PM Theresa May tries to find a final compromise in her cabinet to unlock the negotiations with the EU.
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“The ambition was to have a full draft withdrawal text ready early this week but the decision may be postponed further, as May’s proposal is under fire. While the withdrawal text is 95% complete, there is still no agreement on the backstop solution to the Irish border (i.e. how does one avoid a hard border between Ireland and Northern Ireland if the UK and the EU fail to reach an agreement on the permanent future relationship during the transition, which removes the need for a hard border).”
“The development during the past week supports our view that the real test is probably not reaching an agreement with the EU, but to get the deal through the House of Commons. Brexit hardliners, the DUP, moderate pro-EU Conservatives and Labour are all threatening to vote it down.”
“Our base case is still that the EU and the UK will reach an agreement in December but that negotiations may slip into early January.”
“We still expect a decent Brexit (75% probability) but think one should not rule out a ‘no deal’ Brexit (15% probability).”
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