UK: Not a done deal yet – ABN AMRO

Analysts at ABN AMRO point out that the UK and the EU reached a preliminary agreement on the UK’s exit from the EU on Tuesday, and Prime Minister Theresa May got Cabinet approval for it last night.

Key Quotes

“The next step is for the deal to be debated in Parliament, and for the EU side to approve it in a summit later in November. The UK Parliament would vote on the deal in December.”

“The parliamentary arithmetic remains challenging for the deal, with the opposition confirming that it would vote against it this morning (Labour leader Jeremy Corbyn called it a ‘botched’ deal that ‘breaches the government’s own red lines’), and the government holding only a slim majority.”

“So far, leading pro-Brexit ministers Michael Gove and Sajid Javid are said to support the deal, according to Bloomberg News. Regarding the Northern Irish DUP – which props up Prime Minister May’s government – public commentary indicates that they will oppose the deal, although Sky News reports that the government is ‘bullish’ that the DUP would eventually accept it when they see the details of the deal.”

“There are also a number of Conservative Party MPs who have stated they would vote against the deal, but it is possible opposition rebels could vote with the government to offset that.”

“All told, we think parliament will pass the deal to avoid a chaotic No-deal outcome. However, this is with a low conviction level. If parliament opposes the deal and the government collapses, a new government could be returned to push through an agreement, whether Conservative or Labour. However, there continues to be a material risk of a No-deal Brexit.”