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On 6 July PM May and her cabinet agreed on a blueprint for the future EU-UK economic relationship and the plan intends to de facto keep the UK in the EU Customs Union and Single Market for goods, though in an adjusted form, points out the research team at Rabobank.

Key Quotes

 “The shift of the UK government towards a softer Brexit triggered the resignation of pro-Brexit ministers David Davis and Boris Johnson.”

“These resignations could mobilise pro-Brexit Conservatives against PM May and lead to a leadership challenge; such a turn of events could delay Brexit negotiations and lead to a disorderly Brexit.”

“But Theresa May is expected to survive this crisis and that should strengthen her ‘soft Brexit’ mandate.”

“Nevertheless, for a ‘soft Brexit’ to materialize, she still has to overcome several milestones in the coming months.”

“Thus, a ‘hard Brexit’ still remains a possible outcome of Brexit negotiations, though we maintain our base case of a comprehensive Free Trade Agreement (FTA).”