Eye of the Brexit Storm

4 September, 2019

Rob Bastin

Yesterday parliament returned from summer recess and with it the Brexit agenda is firmly back on the table. Boris’s careless approach of using a no-deal Brexit as negotiating leverage with the EU has infuriated many MP’s in commons, including those in his own party. This had lead to MP’s from varying parties to come together and table an emergency debate and vote last night in order to attempt to legally block a ‘no deal’ Brexit in parliament today. The bill would seek to a 3 month extension until at least 31st January if no new withdrawal deal is agreed by 19th October, the day after the EU summit. Boris is hoping that the threat of a no deal will see the EU cave in at the last minute and give the UK the deal we want, however he seems to be the only person that actually believes this to be realistic with the EU remaining firm that there are no further negotiations to be had on the withdrawal bill, only new suggestions and directions which the government are yet to propose.

Boris’s first session back in parliament got off to the worst start possible, with conservative member Philip Lee crossing the floor in front of him to leave and join the Liberal Democrats, which is turn would see the government officially lose its majority. Whilst a minority government doesn’t automatically trigger anything, it does leave them very exposed to a vote of no confidence from the opposition, and further increases the likelihood of a snap general election. Following the session speaker John Bercow allowed the emergency debate to be discussed ahead of voting for to allow legislation of this critical bill that could prevent the UK from crashing out the EU with a disorderly no deal. After nearly 4 hours of debate, the house voted down the government by 328 to 301 giving the house control today to formally vote on the new bill that is being described by may as the Brexit Endgame.

Should today’s bill be successfully passed, Boris has already responded that he will be calling a general election on October 14th or 15th. In fact we could still be facing a general election should the bill fail via a vote of no confidence from the opposition, however without protections of a legal bill to stop no deal, Boris could still using the timing of such an election to his advantage when it comes to a no deal exit. With the prorogation of parliament set to kick in on Monday, MPs only have a few days to rush this bill through so this week is likely to a pivotal moment in the Brexit Endgame, and indeed the future of the Pound. Anyone with an upcoming currency requirement would be wise to stay in close contact with your currency consultant over the coming days so you can either proact or react accordingly to get the best exchange rate for your transfer. MPs will vote to pass legislation today, and this could then be moved to the house of lords tomorrow & potentially be given royal consent by Monday 9th.

Whether or not no-deal is legally blocked will be a significant factor in the future of both Brexit and the Pound. If there is no way to stop a no deal, then there is likely no way to stop the pound from falling. However with no deal off the table entirely, we could see some welcome buying opportunities in the immediate term before the reality of elections and recessions swiftly kick back in over the next month. This bill would be an important step for the future of the Pound if passed, but it is still far from having escaped the current uncertainty and pressures that are weighing on it so any recoveries in exchange rates should be relatively restricted. Speak to your consultant today so you don’t caught out in the volatility to come.