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Danske bank analyst point out that the UK PM Theresa May was forced to abandon plans to hold a third ‘meaningful vote’ yesterday, after members of parliament voted in favour of taking control over the Brexit process by demanding a series of indicative votes on a way forward taking place on Wednesday.

Key Quotes

“While this is another sign that May is Prime Minister in name only, it may actually help getting her deal over the finish line, as some of the Brexiteers, who have made life very difficult for her, seem afraid of losing control of Brexit, as it increases the likelihood of a softer Brexit (customs union or Norway-style single market participation) or a long extension.”

“Still, May will likely need to get more Labour MPs on board to get her deal through parliament. The indicative votes will not be legally binding and hence we do not know how the EU will respond. As the issue in the UK parliament is still that there is no majority for anything, it remains to be seen whether this is the start towards a compromise in a softer Brexit direction. Our base case remains a long extension but the development on Wednesday is crucial near term. We cannot rule out Theresa May resigning or a general election at this point.”