Economist Lee Sue Ann at UOB Group assessed the recent developments in the UK political scenario and potential effects on the Brexit process.
Key Quotes
“The UK grabbed headlines on Wednesday (28 August), on reports that PM Boris Johnson received approval from Queen Elizabeth to prorogue (suspend) UK Parliament no earlier than 9 September and no later than 12 September, until 14 October”.
“When Parliament is prorogued, no debates and votes are held. As such, the Brexit saga has certainly taken a new turn, and UK MPs have been quick to condemn the move as an effort to sidestep parliamentary inclusion in the Brexit process. GBP/USD plunged to a six-day low of 1.2157, and yields on British 10-year Gilts fell around 5bps to 0.45%, its lowest in more than a week”.
“The new plan by Johnson effectively extends the recess now to five weeks, whereby the House of Commons will be prorogued around 9-12 September, and no longer resume on 7 October as planned”.
“Boris Johnson’s plan also involves holding a Queen’s Speech on 14 October, setting out the Government’s legislative programme. This speech is a norm when a new government takes power in Britain, but also requires five days of debate afterwards”.
“This means that a window to stop a no-deal Brexit might not open until 21 October, perilously close (less than 10 days) to the 31 October Brexit deadline, and probably not leaving enough time for a law to be passed by both the House of Commons and House of Lords”.
“This has led to increasing pressure to find a solution prior to recess beginning, which means that Parliament has until 3 September to have a meaningful say in the Brexit process”.
“But more importantly, by proroguing Parliament, we are now seeing increased risks of anything from passing a no-confidence vote in the Government as early as next week, and elections, to a full blown constitutional crisis. This may likely mean that Brexit would have to be delayed, once again“.
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