Extract from Redwood Financial’s Economic Review August 2019
With the second deadline now less than 60 days away, it remains unclear how the Brexit saga is ultimately going to play out, although the chance of a no-deal scenario continues to rise.
While efforts to negotiate a new Brexit deal are continuing, the current position is that the UK will leave the EU on 31 October with or without a ‘divorce’ deal. And the Prime Minister has emphatically demonstrated his determination to achieve this aim by proroguing Parliament for five weeks with MPs effectively being locked out of the House of Commons until 14 October.
Throughout August, however, Mr Johnson did continue to express his desire to achieve a deal. Indeed, following meetings with German Chancellor Angela Merkel and French President Emmanuel Macron before and during the G7 Summit in Biarritz, the Prime Minister stated his encouragement that a deal could yet be reached.
Mr Johnson also recently promised to intensify efforts to secure a deal, with UK Brexit negotiators now set to meet their EU counterparts twice a week in the run-up to a crucial EU summit on 17 October. However, while the EU has said it will listen to any new proposals, the onus has firmly been placed on the UK to find acceptable alternative arrangements, particularly in relation to the controversial Irish backstop.
Although twice-weekly discussions may increase the prospect of a deal being struck, the two sides clearly remain some distance apart on a number of issues and hopes of the talks proving fruitful would appear to remain relatively slim. And, with the parliamentary shutdown seemingly decreasing MPs’ chances of blocking a no-deal Brexit, the odds on the UK leaving the EU on 31 October with no deal have certainly shortened.
The story has progressed at a rapid pace in early September, find out more in our next Economic Review.