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Mikael Olai Milhøj, senior analyst at Danske Bank, points out that the UK PM Theresa May reached an agreement with the EU27 on a new Brexit deal late last night and the new Brexit deal gives the UK further assurances that the EU27 cannot keep the UK in the backstop forever.

Key Quotes

“Also, the EU27 and UK agreed to speed up the negotiations on the future relationship, which, hopefully, should make the backstop redundant. Juncker said the EU will not negotiate any more.”

“The big question is whether the new concessions are enough for the hard Brexiteers and the DUP to support her in today’s vote. As we have said several times, especially if the DUP backs the deal, it is a potential game changer, as many Brexiteers will likely follow suit. As of now, we have not changed our call that the probability of the deal passing today is just 15%. The problem for Theresa May is her very slim majority.”

“Even if the DUP jumps on board and some hard Brexiteers follow suit, it may not be enough, as some die hard Conservative Brexiteers and Remainers probably will vote against the deal anyway and it is questionable whether she can get sufficient backing from Labour Brexiteers. If the deal is well received, we may change our minds during the day. Our base case remains that May’s deal will pass eventually, but given most expect a delay of Brexit, the pressure is still not significant enough.”