In January, a poll of 100 Brexit experts from UK academia conducted by UK in a Changing Europe showed 47% chance of a no-deal Brexit and 60% expecting that the UK would leave the EU on 29 March 2019.
Already frenzied, the domestic political crisis in the UK over the Brexit endgame is set to get even hotter during the next few weeks.
We hold to our core call that a no-deal will be avoided. We have two high conviction views on the outlook. First of these – our call that the UK will avoid crashing out of the EU (the “no deal” scenario). We first came out with this call last July and have since stuck to it in the teeth of serious but – so far, in our view – unconvincing counter-arguments. The FX markets now seem to agree as sterling (cable rate) has since last month moved up and away from the ‘no deal’ range.
We also now expect an Article 50 extension. This applies even if the UK government manages by then to reverse its huge defeat last week in the parliamentary vote on the withdrawal package – i.e. the Withdrawal Agreement and accompanying non-binding Political Declaration.
Theresa May's government was forced to request two extensions under Article 50. Markets gradually began to price in reduced chances of a no deal Brexit.