Brexit – a didactic play for game theory

The course of the Brexit and the question of whether it should take place with or without a contract have long since abandoned rational considerations. In fact, it is only a matter of convictions and the will to assert one’s own convictions.
Prime Minister Boris Johnson’s latest move is no exception. With the forced pause imposed on Parliament, Johnson is certainly reaching his constitutional limits, perhaps a little beyond them. In terms of negotiating tactics, however, it is a good move. His threat to the EU to actually implement a no-deal brexit has thus gained a great deal of credibility. This has reduced the British Parliament’s room for manoeuvre and its ability to thwart Prime Minister Johnson’s plans.

For Johnson, the pressure to reach an agreement with the EU has actually increased in recent days. For example, government analyses gave clear warnings of impending shortages of food and medical supplies in the event of an unregulated Brexit. But this is probably only the tip of the iceberg. The consequences for the British population and economy are likely to be very negative in the first few months. Premier Johnson has now compensated for this negotiating tactical disadvantage.

What will happen next? Volatility in the UK’s political process is likely to remain high. However, contacts with the EU should continue to be used to continue talks on the approaching Brexit. An agreement only seems realistic a few days before 31 October. Until then, expectations in the financial markets should continue to fluctuate between deal and no-deal brexit – there is basically nothing in between.

I still expect a regulated Brexit. Both sides should move. The balance between a political loss of face and a sustainable result will be the challenge; realpolitik considerations, on the other hand, are likely to take a back seat. Accordingly, in my estimation the probability of an agreement is only 60%. Not very high, but still over 50%.

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