What do Wall Street banks say about Brexit?

Brexit may still seem chaotic and confused, but big banks continue to make analyzes and "bets" for the development of events.

From now on, there may be several options for breaking out of the saga: Breaking without a bargain, convening extraordinary elections, creating a soft Brexit deal or, ultimately, not coming out of the European Union.

Still, Brexit remains interesting for the banks and they share their vision.

Goldman Sachs

The bank claims that Brexit costs the United Kingdom $ 783 million a week, as early as 2016 after the referendum. Economic growth has fallen to about 2.5%.

"The current uncertainty about future political and economic relations with the EU reflected real consequences for the UK economy, and these consequences are already felt in other countries." - said Goldman analysts.

The bank also predicts a 15% chance from no-deal Brexit, which could cause a drop in the value of pounds of 17%. According to Goldman, the chances of Brexit never happen are 35%.

J.P. Morgan

The inability of legislators to draw up a clear plan for the time being gives Theresa May's extremely fragile opportunity to return to parliament for the fourth time to vote on her agreement.

However, Parliament is convinced that there is no way to vote on the approval of the May plan because of its total uniformity each time. Therefore, the bank assumes that the parliament can rely on other alternatives.

One of these alternatives is precisely the parliament to make a quick soft-brexit process to happen next week.

From J.P. Morgan thinks that there is a 30% chance of having extraordinary elections, and for a further extension of Brexit there is a chance of 20%. The second referendum and no-deal Brexit share a 15% chance of happening.

Citi

Citi remain impartial to any of the Brexit variants.

However, the bank does not leave without its own analysis, suggesting that the Conservative Party will press for Brexit no-deal.

About 200 party members of the party signed a letter to Theresa May, calling for a "settled" no-deal exit. But Citi still expects the government to step away from this idea.

The bank notes that a general election will only deepen political uncertainty, which would also strengthen the positions of the Scottish National Party (SNP).

As for May, to return her deal for the fourth time in Parliament, the bank believes that it will face another failure.

Deutsche Bank

Deutsche believes that the chance for Britain to leave the EU without a deal on April 12 is tall, with the German bank remaining bearish to the pound given the whole chaos.

According to them, the chances of no-deal Brexit are 25% at the moment, from their previous analysis of 20%. The main scenario of the bank is that parliament will not reach consensus on any of the options, with extraordinary elections taking place. If this happens, the expectation is that a new left-oriented government headed by the Leibists may form.

UBS

Swiss giant UBS assumes that, given the current conditions, there is no option other than parliamentary elections.

Such elections shall be held every five years, unless there is no vote of no confidence or two-thirds of the majority vote for the convening of extraordinary elections.

UBS believes this is a pretty good option because it will give the Conservative Party an advantage and increase their chances of winning the election. This will also give May a push to push its deal.

Source: CNBC

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