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Four scenarios for Brexit, given the uncertainty surrounding Theresa May
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Loading...Teresa May's leadership is in doubt after a tough party conference. Currently, the big risk for the UK is to fail to conclude a deal with the EU in the next 18 months until the day that Brexit will be a reality.
In this article we will look at the four possible scenarios of how events can evolve, given the uncertainty surrounding Teresa May.
1. Teresa May will remain in office as UK Prime Minister
If May opposition does not get enough votes to get her off, she will remain in office and is likely to schedule early elections. This, in turn, will slow the negotiations on Brexit and the country risks being left without a trade deal with the EU. Currently, negotiations on Brexit are going very hard for the UK, as EU members are firm in their decisions and demands. As a result, the GBP has seen a sharp decline of nearly 3% over the past week.
2. Teresa May resigned
According to most analysts who observe the work of May's party, a possible resignation of their leader is unlikely. However, if this happens, the party will likely spend three months selecting a new chapter that will be pro-Brexit and will take the negotiations with bolder steps. Still, against the backdrop of the 18-month term, 3-month elections will result in a great slowdown and loss for the country.
Meanwhile, our expectations are that GBP will continue to depreciate.
3. May resigns, and Brexit negotiator David Davis takes up her post.
UK Chief Negotiator David Davis can be a good substitute without the country going to early elections or May's party to delay 3 months in the election of a deputy. With this option, the markets will calm down, and the GBP will most likely stop falling.
4. New elections in the country and Corbyn wins
The polls show that, in the event of a possible election in the country, Labor will take power and aim for a softer Brexit. Or, in other words, they will do their best to reach a bargained trade deal with the EU. In any case, this will take a few more months to delay, which will significantly shorten the negotiation period. We expect GBP to stabilize, and then if Corbyn is able to spend the country's tax raising laws to depreciate.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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