Danske Bank note that the Finnish PM Antti Rinne (holder of the rotating EU presidency) said ‘more time’ was needed to reach an agreement about Brexit.
Key Quotes
“While it is not our base case, it is still possible for the two sides to reach an agreement before the 31 October deadline. Should the negotiations be close to a deal, the EU can call an extraordinary summit later, which – as reported by the BBC yesterday – it is considering (this would require a short extension allowing time for further negotiations).”
“In addition, the idea of calling a confirmatory referendum, either on Theresa May’s old Brexit deal or PM Johnson’s possible Brexit deal, is gathering attention. Yesterday in the House of Commons, Labour leader Jeremy Corbyn hinted that he too may support a confirmatory referendum saying that people should decide ‘in a final say’, echoing comments from his lieutenants in the Labour Party.”
“‘Remain’ would most likely be one of the options on the ballot and given that ‘remain’ is ahead in most polls, markets will likely think this is positive (the GBP also strengthened a bit on the back of Corbyn’s comment). We will monitor this closely in coming days. Our base case remains that the UK is heading for an extension (as pencilled out in the Brexit Delay Bill, which requires the government to ask for an extension on Saturday if no deal is reached) followed by a snap election.”
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