The great Brexit gamble – Rabobank

An election will be held on December 12. Prime minister Johnson is looking for a five-year mandate and a parliamentary majority for his Brexit-deal. It is easier for Johnson to win a parliamentary majority in an election than to win a popular majority in a People’s Vote, writes Stefan Koopman – Senior Market Economist at Rabobank.

Key quotes:

“Assuming that clarity on Brexit is the only thing that is broadly desired, party allegiances could potentially break down. The election will be dominated by tactical voting.”
 
“If Johnson’s bet pays off, the new parliament will be able to pass Johnson’s existing deal. “Brexit” will then move to the tricky negotiations regarding the future relationship.”
 
“But if Johnson’s bet backfires, the plot will twist again. A minority government led by Labour could lead the UK to a second referendum, and potentially a Remain outcome.”
 
“The first scenario appears more likely, but opens up the risk of a no-deal Brexit at the end of 2020. A Tory majority may therefore bring plenty of scope for sterling volatility next year.”