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An election will be held on December 12. Prime minister Johnson is looking for a five-year mandate and a parliamentary majority for his Brexit-deal. It is easier for Johnson to win a parliamentary majority in an election than to win a popular majority in a People’s Vote, writes Stefan Koopman – Senior Market Economist at Rabobank.

Key quotes:

“Assuming that clarity on Brexit is the only thing that is broadly desired, party allegiances could potentially break down. The election will be dominated by tactical voting.”
“If Johnson’s bet pays off, the new parliament will be able to pass Johnson’s existing deal. “Brexit” will then move to the tricky negotiations regarding the future relationship.”
“But if Johnson’s bet backfires, the plot will twist again. A minority government led by Labour could lead the UK to a second referendum, and potentially a Remain outcome.”
“The first scenario appears more likely, but opens up the risk of a no-deal Brexit at the end of 2020. A Tory majority may therefore bring plenty of scope for sterling volatility next year.”