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Christopher Graham, economist at Standard Chartered, suggests that Brexit remains in a state of flux with full range of options from a no-deal exit on 31 October to No Brexit, remaining on the table.

Key Quotes

“The Article 50 deadline on 31 October means the coming days and weeks should provide some clarity.”

“The landing zone for a Brexit deal remains extremely narrow, and despite Prime Minister (PM) Boris Johnson’s new offer to the EU last week, we think it remains unlikely that a breakthrough will be achieved. As a result, the UK leaving the EU with a negotiated deal by 31 October remains a low probability event (10%).”

“Parliament’s success in passing the Benn Act last month (requiring the PM to request from the EU an Article 50 extension by 19 October, assuming the EU and parliament have not agreed to a deal by then) means a Brexit extension looks highly likely (80%). It is not impossible that Johnson finds a way to circumvent the law and lead the UK out of the EU without a deal on 31 October, but it remains as doubtful as the UK leaving with a deal (10%).”

“The larger question looms: what will the extension be used for? Our view has been that an early election seems inevitable given parliament’s failure to agree on any form of Brexit; the government’s recent loss of its majority reinforces this view. However, there is a growing prospect that opposition MPs will be incentivised to push for a second referendum before an election.”

“For now, Labour leader Jeremy Corbyn still favours an election, but if he changes his mind a second referendum will become the most likely outcome, probably by March 2020, and an election delayed until May 2020.”