What s d fferent now from 2016?
The major ty of market part c pants st ll does not cons der any Brex t deal to be very l kely. After all, we are talk ng about a dec s on that w ll have far-reach ng effects on the real economy n the mmed ate aftermath of March 29, contrary to the EU referendum n 2016 where the day after th ngs bas cally cont nued as before. The strong Sterl ng deprec at on follow ng
Brex t M n ster Dom n c Raab’s res gnat on also suggests that the market prev ously cons dered the r sk of a no deal Brex t to be lower. But why s the market so much more relaxed about Sterl ng than t was before the Brex t referendum? F rst of all th s s l kely due to the fact that the EU referendum could only result n one of two poss ble outcomes: a major ty dec s on to rema n n the EU or that to leave the EU, wh le the latter opt on seemed a very abstract concept for most at the t me – and as t now seems, that also ncluded the Brex teers. Of course, the Br t sh Parl ament w ll e ther vote for or aga nst the ex t agreement n much the same manner, but already now var ous scenar os are mag nable of what may happen n the more l kely case that the MPs vote aga nst the deal. In add t on to a no deal Brex t among the opt ons are renewed general elect ons, a second referendum as well as an extens on of the negot at ons. In other words: everyth ng s poss ble, nclud ng the scenar o that Brex t w ll be ent rely off the agenda. After all, the past few weeks have taught us that pol t cs n the UK can be pretty unpred ctable. (November 23)