UK: Supreme Court hearing on Article 50 trigger remains an event risk – Nomura

Research Team at Nomura, suggests that in UK politics the event risk remains the Supreme Court decision in December on whether or not a parliament vote is required to trigger Article 50.

Key Quotes

“The consensus view is that a vote in parliament would soften the UK’s terms of negotiations; we disagree and expect any vote to remain vague and optimistic as to what the UK intends to achieve in negotiations. But any headline resulting from the court case ruling in favour of a parliament vote for Article 50 would likely lead to a further position squeeze higher in GBP. The hearing takes place on 5-8 December but we could be waiting for the judgement into January.” 

“On the flipside there is also the possibility of an early vote in the commons to avoid having to wait for the decision of the court. It’s not our base case but there have been some reports of Tory MPs preparing for it and Brexit Secretary, David Davis, earlier this week hinting that the government wouldn’t refuse. At this early stage it’s unlikely the Civil Service’s Brexit preparations are mature enough for the government to feel confident triggering Article 50 so soon. Q1 of next year still looks like the most likely timing for the trigger.” 

“There is also the Autumn Statement on 23 November, which may provide market- positive headlines on infrastructure spending that could further support GBP.”