Was Experten vom Brexit-Deal halten - Seite 6

What if the deal is not ratified?

Should MPs decline to ratify the agreement on Saturday, what happens next? In our view, the most likely outcome is a general election in November. MPs have three options if they choose not to ratify the agreement as it stands:

1) amend the agreement to attach a confirmatory referendum, 2) vote down the government in a confidence motion next week and replace it with a caretaker government, 3) support a general election motion called by the government.

The Labour Party have indicated they may support a cross party amendment to attach a confirmatory referendum to the agreement. However, the government have made it clear that they would not support a confirmatory referendum and would refuse to finance it. It may be possible for MPs to use legislation to force the government to hold a referendum, but based on constitutional precedent, the bar to do so would be very high.

After declining to ratify an agreement, MPs could call a confidence motion in the government on Saturday or next week. Under the Fixed Term Parliament Act, this would give MPs a 14 day period in which to form a new government. We've discussed the possibility of a caretaker government formed to request an extension from the EU27 for an election or second referendum in previous notes.

Presently, we think this is less likely, as the government has confirmed it will comply with the terms of the Benn/Burt legislation and request an extension from the EU27 on the 19th October if no deal is ratified. Meanwhile, securing a caretaker government on the basis of a second referendum would be politically difficult, but not impossible.

This leaves an election. In our view this is the most likely outcome. If the government were to lose a ratification vote on Saturday, Prime Minister Johnson could request an extension to Article 50 from the EU27 and table a motion under the Fixed Term Parliament Act to hold an election in November. If opposition parties refused to vote for an election, he could resign and instruct his cabinet to do the same. The political pressure to hold such an election would be high, as a caretaker government formed under these circumstances would be seen as politically illegitimate.

If an election was to take place in November, there is considerable uncertainty about the result. Some opinion polls suggest a substantial Conservative lead while others show a smaller lead. In general, however, the Conservatives' polling performance has improved since Mr Johnson became leader. Importantly, and as discussed above, only one scenario would reintroduce the risk of a no deal Brexit: that of the Conservatives forming a minority government with the support of the Brexit

What does the deal tell us about the future?

In short, not very much. The new deal has come with a revised Political Declaration on the Future Relationship.1 This substantially waters down the close economic partnership that Prime Minister May's deal sought to achieve via the all UK backstop, and instead outlines a limited future relationship based on an FTA.

A modest positive surprise is that level playing field provisions that Mr Johnson's letter to Mr Juncker explicitly sought to remove two weeks ago have been reinstated, which increases the prospect of a closer future economic relationship. Nevertheless, under the terms of the Political Declaration, the UK's harmonisation with the EU's regulatory architecture in goods and services would be substantially reduced, in turn limiting market access.

Importantly, however, the Political Declaration on the Future Relationship was always a non legally binding document and as such, the debate on the terms of the UK's long term economic relationship with the EU27 will only begin when and if a deal is signed. A crucial question for the UK economy and market is the length of the transition period. As currently stated, the transition period is due to expire at the end of 2020, with a one-off option of extension to the end of 2022. The next Brexit cliff edge will occur around the middle of next year, when the debate on extending the transition period will begin.

Market implications and updated probabilities We remain positive on the pound regardless of the outcome of Saturday's vote. In our view, it seems slightly more likely than not the deal will fail to pass parliament. But the most likely outcome in these circumstances is a Conservative majority in a general election, after which Prime Minister Johnson's deal is then ratified.

- Johnson's deal is ratified on Saturday, UK leaves EU27 with a deal on 31^st October: 45%

- Johnson's deal is not ratified on Saturday: 55%, of which:

- Confirmatory referendum before election: 10%

- General election leads to Johnson's deal: 25%

- General election leads to no deal Brexit: 10%

- General election leads to second referendum: 10%