Since the EU approved Britain’s Brexit extension to 31st January 2020, Brexit has been put on ice.
For Juncker and EU member states, the call for a general election on 12th December gave some hope that Britain’s decision to leave the EU could be undone.
MPs failed to deliver on a democratic vote over a period of 3-years of political wrangling.
Not only did the EU Referendum cut short the political careers of two prime ministers but also delivered the keys of Number 10 to the Brexiteer of all Brexiteers.
As the UK General Election rapidly approaches, the chances of Britain’s departure from the EU remains elevated.
Not only has Boris Johnson managed to put back together a Tory Party disarray but has also gained support from the electorate. That is if the opinion polls are anything to go by…
With just 19 days remaining until the General Election, the Tories look set to finally deliver on Brexit.
Boris Johnson, with an anticipated parliamentary majority, is expected to reintroduce his Brexit deal to Parliament before Christmas.
Electoral Calculus predicts the Tories to gain 43 seats on 12th December, which would give a majority of 72 seats.
The Tories manifesto is Johnson’s Brexit deal, with Johnson stating that the agreement is oven-ready.
On immigration, Johnson is also looking to end freedom of movement for EU citizens. The Tories plan to bring into effect an Australian-style points-based system.
Immigration had been a key contributor to Britain’s decision to leave the EU and continues to drive support for populous governments.
So, while Labour Party leader Corbyn sits on the Brexit fence, the upcoming General Election is and has always been a 2nd Brexit vote.
Johnson will deliver should he win with the projected majority. Corbyn, however, would give voters yet another visit to polling stations to decide on Britain’s membership. A 2nd vote in favor of departing the EU would then result in an attempt to renegotiate an already approved Brexit deal.
More uncertainty for Britain, the economy, the EU and, more importantly, the electorate…
The Pound fell by 0.49% to $1.2834 in the week ending 22nd November. Having found support from the opinion polls and predictors going into the week, the televised debate on Tuesday and Q&A with political party leaders on Friday contributed to the Pound’s pullback.
Volatility will continue to build in the run-up to Election Day. Expect Brexit chatter and heated televised debates to also focus primarily on Brexit.
What Lies Ahead?
As Election Day gets ever nearer, we can expect Brexit chatter to build. While Johnson will continue to beat the Brexit Drum, the opposition party and the SNP, the Liberal Democrats will attempt to drum up support from the Remainers. There’s also the fence-sitters to convince…
Live televised debates on Sky News on Thursday and Question Time on Friday will garner plenty of interest.
Voters will have an opportunity to digest views from each of the main political parties.
Brexit fatigue has and will likely continue to contribute to the Tory Party’s upside in the opinion polls.
The Election could deliver a different outcome, however. Theresa May discovered this the hard way in her snap election that led to a minority government and a Brexit standoff.
If Johnson fails to win with a majority, a hung parliament would hand the keys of Number 10 to Corbyn. The SNP has already been clear that they would side with Labour as long as Corbyn allows another Scottish Referendum.
It would certainly be a testy time for Britain. Voters would not only have to vote on membership with the EU. The Scots would also have to also decide on whether to go it alone…
We sat down with Michael Stark, an author with Exness, and asked his opinion on the political situation in the UK and how it could affect Brexit and the economy.
Why do the financial markets prefer a Johnson victory and an orderly departure from the EU?
Companies and, by extension, markets, like stability. Although any form of Brexit is certain to stunt economic growth over the next few years, no deal is clearly the worst possible outcome for the economy. Businesses in general can handle a worse outlook, but they usually can’t handle extended periods of uncertainty very well.
Big and small businesses across the UK are understandably very reluctant to make significant investments or hire many new employees when nobody knows what form Brexit is going to take. We’ve basically been in this situation for three years now, starting when no deal was first seriously considered as an option in late 2016.
Mr Johnson has a workable and reasonably popular deal that might stop the seemingly endless debate and allow the UK and its inhabitants to plan for the future with a degree of sureness. After such a long wait, this is what markets crave.
A Tory Party loss would suggest that voters are in favor of Britain remaining within the EU. Such an outcome should lead to a vote in favor of remaining in a 2nd referendum. Isn’t that a better outcome for the Pound and the UK economy?
Probably but not necessarily. The real question here is what would constitute a ‘loss’ and what would happen in such a situation. Jo Swinson has repeatedly ruled out a coalition with Labour. Equally a coalition between Labour and the Scottish National Party if the Conservatives lose is by no means guaranteed. For either of these to happen, though, there’d need to be a fairly big swing away from the Conservatives across most of the country; this isn’t looking likely.
As far as many voters are concerned, Labour’s policy on Brexit just isn’t realistic. The party would renegotiate Mr Johnson’s deal and put it to a public vote against remain. The problem is that Labour wouldn’t take a side and campaign until later, so their promise to ‘get Brexit sorted’ within six months if they won the election looks a lot like a pipe dream.
Markets have basically priced in a workable majority for the Conservatives next month. Anything else would probably mean a sharp drop for the pound in the short term. Ultimately, a majority for Labour (which almost certainly won’t happen) would indeed be a better outcome for the pound in the further future despite the prospect of even more instability in 2020.
Both the Tories and the opposition party have thrown in pledges in a bid to woo Brexit fence-sitters. On the face of it, whose proposed policies would be more favorable for the Pound, Brexit aside?
Most likely Labour’s, but that’s mainly because the Conservatives don’t really have many policies other than getting Brexit done. Policies in Labour’s manifesto aimed at boosting investment would probably be very positive for the pound if implemented. That last bit is key: a number of British economists, while praising Labour’s intentions, have questioned how practical they are.
Labour’s proposed hike to corporation tax would certainly be bad for shares, but the proceeds of this being used for investment could spur the pound upward, Brexit aside. More investment by government would mean more jobs, and more jobs would mean more spending, boosting Britain’s economy and giving fundamental support to the pound.
The big issue though is that nobody can really put Brexit aside now: this election is basically about Brexit. With the deadline currently 31st January, most other policies are sideshows. Tinkering with corporation tax and targeting investment better don’t matter much when a country’s about to leave the biggest trade bloc in the world.
Opinions are personal to the author and do not reflect those of Exness.
This article was originally posted on FX Empire