It’s definitely a fierce cut-and-thrust: regardless of how often one or the other of the two sides has let it be known that an agreement was only a litte way off, there continues to be discord between Brexit negotiators in Brussels as far as the critical issues are concerned. Their task is being made more difficult by the persistent political in-fighting in Westminster, where Brexit hardliners and advocates of a more moderate course are at irreconcilable loggerheads. Despite long-drawn-out meetings, Prime Minister May has not so far managed to bring her cabinet – let alone the British parliament – into line.
In the light of this, the Brexit roadmap is looking increasingly ambitious. Now that the special summit originally planned for some time in November presumably appears to be definitively off the table, the focus has moved to the December summit (13/14 December). By then, at the latest, an agreement will need to have been reached, with Premier May then planning to already submit the withdrawal treaty text to the UK parliament just a few days later. If May were to succeed in securing a majority, the ratification process would roll on from the beginning of January onwards: the British parliament is under a legal obligation to pass a law in this connection, and the European Council and the European Parliament both have to grant their assent to the withdrawal agreement as well. However, if Prime Minister May fails to clear the first obstacle, a “no-deal Brexit” could scarcely still be averted. Although there has recently been a resurgence of speculation about the option of a second referendum, such a scenario looks hardly conceivable to us.
In spite of all the bad news, we are currently continuing to assume that an agreement can be reached, and that the UK parliament – mindful of the threat of a “no-deal Brexit” – will be prepared to go along with it. Before this comes to pass, though, sterling investors ought to brace themselves for some extremely volatile weeks.