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“PM May survived the Annual Conference of the Conservative Party unscathed. That strengthens her position domestically but the threat of a leadership challenge by her party persist,” note Rabobank analysts.

Key quotes

“The big announcement at the Tory Conference was a new immigration policy after Brexit, one that would curb net migration, in particular low skilled. Labour also held their annual conference and reframed their Brexit position to not only favour a customs union with the EU, but also a referendum as a solution of last resort.”

“The UK is reportedly working on an alternative backstop for preventing a hard Irish border, one that would de facto keep Northern Ireland in the EU and the whole of the UK in the EU Customs Union, though probably temporarily. The proposal is controversial but there are reasons to believe it might turn politically palatable.”

“Negotiations between the EU and the UK are expected to intensify ahead of the EU top on 18-19 October. Lack of progress on the Irish conundrum by then could derail talks and thereby increase the odds of a ‘hard Brexit’.”

“Meanwhile we maintain our basecase that the EU and the UK will reach a last minute deal that stipulated a transition period and a Free Trade Agreement after that. Nevertheless, the risks of a hard Brexit remain uncomfortably high.”