UK: Finding common ground on Brexit – Danske Bank

Arne Lohmann Rasmussen, chief analyst at Danske Bank, points out that in the UK, PM Theresa May said yesterday that she wants to find common ground on Brexit with Labour leader Jeremy Corbyn, which is quite unusual in the UK given the old two-party system.

Key Quotes

“A way forward could involve accepting a permanent customs union, something which Labour has advocated for a long time while May has objected (and the proposal was only three votes from reaching a majority in Monday’s indicative vote), but it is definitely not without risk for May, as it may split her party in two.”

“When analysing Brexit, it is important to remember that it is also about history – May probably would not want to be the prime minister getting the UK out of the EU without a deal, as it may have a long-lasting damaging impact on the UK, economically and politically. May, if her words can be trusted, finally decided country was above party.”

“The hard Brexiteers are clearly upset and may even vote against the government in a no confidence vote if May finalises Brexit with Corbyn, so any agreement would involve Corbyn accepting no snap election until after the withdrawal.”

“Any plan must also be built on the Withdrawal Agreement, which will upset the supporting party, the DUP. The Brexiteers and the DUP also have some thinking to do, as Brexiteers have to support May’s deal to avoid a softer Brexit and the DUP risks losing power after May reached out to Corbyn.”

“For now, we stick to our view that we are heading for a long extension to at least year-end but we have to monitor the development over the next week, ahead of the EU summit on 10 April. May also said yesterday that she hoped the negotiations could be sorted out quickly (there is talk the government aims within the next three days) so the UK only needs the short extension to 22 May still. Overall, yesterday’s development was positive, as it indicates the risk of a no deal Brexit remains low, but not negligible.”