U.K. Assets Roiled as Delay on Brexit Vote Sparks No-Deal Fears
Comment of the Day

December 10 2018

Commentary by Eoin Treacy

U.K. Assets Roiled as Delay on Brexit Vote Sparks No-Deal Fears

This article by Charlotte Ryan, John Ainger and Shoko Oda for Bloomberg may be of interest to subscribers. Here is a section:

The delay in the vote means an EU summit later in the week will be the next focus for markets. Traders had been planning to stay late at the office Tuesday in anticipation of significant price swings on the vote. May said she would try to address concerns over the Irish border and step up preparations for a no-deal scenario.

“This is very strong risk-off move,” said John Wraith, head of U.K. macro rates at UBS Group AG. “The market clearly believes she will not get anything material enough from the EU to turn that scale of opposition around, so even if the vote is delayed it’s going to end in the same way -- with a big defeat for the government, and the end of the Withdrawal Agreement -- but now it will happen even closer to the date of the cliff edge.”

Eoin Treacy's view

The EU has said they have nothing left to offer and will not negotiate further. However, that is not exactly true. If the UK does in fact leave the EU without a deal, then negotiations on a trade deal will probably begin immediately. For the UK, that will probably only be one of many deals it will need to negotiate.  

The last thing the EU needs is a major economy, like the UK, on its doorstep with a devalued currency and an incentive to be as competitive as possible. Quite whether those in power in the UK realise that is another story.

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