Reuters
U.S. investment bank J.P. Morgan said on Wednesday the chances of Britain calling off its divorce from the European Union had increased after a string of humiliating parliamentary defeats for Prime Minister Theresa May cast new doubt over her plan to quit the bloc and sent sterling higher. Britain’s pro-Brexit trade minister Liam Fox also said it was now possible that Brexit would not happen. There was a real danger that parliament would try to “steal” Brexit from the British people, Fox told a parliamentary committee on Wednesday.
In one of the biggest shifts in perceptions since the shock 2016 vote to exit the EU, J.P. Morgan raised the probability of Britain ultimately staying in to 40 percent from 20 percent.
Ever since the referendum, investors have speculated that the United Kingdom’s biggest economic and political shift since World War Two could ultimately be thwarted, though it was unclear what the mechanism might be.
“The UK now appears to have the option of revoking unilaterally and taking a period of time of its own choosing to decide what happens next,” J.P. Morgan economist Malcolm Barr wrote in a note to clients.
He placed a 10 percent probability on a no deal Brexit, down from 20 percent, and a 50 percent probability on an orderly Brexit, down from 60 percent.
On Tuesday, just hours before the start of a five-day debate in the British parliament on May’s Brexit deal, an adviser to the European Court of Justice (ECJ) said Britain could pull back its formal divorce notice without needing the agreement of the other 27 members.
While it is a non-binding opinion and the ECJ is still to rule, the opinion from Advocate General Manuel Campos Sanchez-Bordona also upped the chances of Brexit not happening as planned on March 29.
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