Brexit: Deutsche Bank still sees 50% chance of no-deal by year-end

LONDON (Reuters) – Deutsche Bank (DE:) said on Wednesday it still sees a 50% chance that Britain will leave the European Union without a deal by the end of the year following a general election, but said there’s a 20% chance of a “surprise” agreement later this month.

It gave a 40% chance of a caretaker government being formed and a general election taking place.

Out of the two possible scenarios following that, the bank has a 25% probability of either an orderly Brexit, a second referendum or scrapping of Brexit altogether.

The alternative scenario, with a 15% chance, would be a no-deal Brexit resulting from the general election.

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No-deal Brexit preparation is top priority, UK’s Johnson tells officials

By William James

LONDON (Reuters) – British Prime Minister Boris Johnson wrote to all government employees on Friday to tell them that preparing for a no-deal exit from the European Union is his and their top priority, according to a copy of the email seen by Reuters.

Johnson has promised voters Britain will leave the EU on Oct. 31 with or without an exit deal, demanding that Brussels drop parts of the existing proposed deal relating to the Irish border and negotiate a fresh exit arrangement.

But the EU is adamant that the legal terms of the deal cannot be rewritten, raising expectations among politicians and financial markets that Britain is headed for an unmanaged divorce from the bloc in less than three months’ time.

“I would very much prefer to leave with a deal – one that must abolish the anti-democratic Irish backstop, which has unacceptable consequences for our country,” Johnson said in the email.

“But I recognise this may not happen. That is why preparing urgently and rapidly for the possibility of an exit without a deal will be my top priority, and it will be the top priority for the Civil Service too.”

Previously, pro-Brexit campaigners have criticised the ranks of Britain’s civil service, which adopts a politically neutral stance while working to enact government policy, saying they were biased towards remaining in the EU and trying to obstruct the exit process.

Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain into a recession, roil financial markets and weaken London’s position as the pre-eminent international financial centre.

“I know many of you have already done a great deal of hard work in mobilising to prepare for a No Deal scenario, so that we can leave on 31 October come what may,” Johnson wrote in the email, first reported by Sky News.

“Between now and then, we must engage and communicate clearly with the British people about what our plans for taking back control mean, what people and businesses need to do, and the support we will provide.”

Although advocates of a no-deal exit say that Britain would swiftly recover from any disruption and benefit over the long term from improved economic flexibility, sterling and other economic indicators reflect a broadly pessimistic outlook.

Data on Friday showed the British economy shrank unexpectedly for the first time since 2012 in the second quarter, dragged down by a slump in manufacturing.

Johnson, however praised the work of government employees in the 650-word bulletin issued on Friday afternoon, and promised a reforming agenda beyond Brexit, highlighting plans for improved public services.

“The Government I lead is fully committed to leaving the European Union by 31 October 2019 and getting a grip of the vital issues that affect people’s lives: the NHS, education and crime,” he wrote.

“While there are no grounds for complacency, there is every reason for optimism.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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UK PM Johnson’s no-deal Brexit gamble hammers sterling

© Reuters. Britain's PM Johnson visits Shervington Farm, St Brides Wentlooge near Newport © Reuters. Britain’s PM Johnson visits Shervington Farm, St Brides Wentlooge near Newport

By William James and Conor Humphries

LONDON/DUBLIN (Reuters) – Prime Minister Boris Johnson promised on Tuesday to lead Britain out of the European Union on Oct. 31 “no matter what” as sterling tumbled and Ireland warned that the bloc would not be renegotiating the thrice defeated divorce deal.

The British pound fell on Tuesday as investors bet Johnson’s Brexit brinkmanship could trigger a messy divorce that would sow chaos through the world economy and financial markets.

Sterling crashed through trading barriers, falling to an intraday low of $ 1.2120 in shallower overnight Asian trade, the lowest since March 2017. The pound has lost 3.6 cents since Johnson was named Britain’s new prime minister a week ago.

“The prime minister made clear that the UK will be leaving the EU on October 31, no matter what,” Johnson’s Downing Street office said in a statement about a phone call with Irish PM Leo Varadkar.

Johnson demanded again that one of the most hotly contested elements of the Brexit divorce agreement – the Irish border backstop – would have to be struck out if there was to be a deal.

“The prime minister made clear that the government will approach any negotiations which take place with determination and energy and in a spirit of friendship, and that his clear preference is to leave the EU with a deal, but it must be one that abolishes the backstop,” Downing Street said.

The backstop is a provision in the deal that would require Britain to obey some EU rules if no other way can be found to keep the land border open between British-ruled Northern Ireland and EU member Ireland. Johnson rejects it as “undemocratic”.

Ireland said the backstop was necessary because of the positions Britain had taken in earlier talks, and that the EU would not renegotiate the Withdrawal Agreement struck by former Prime Minister Theresa May.

“The Taoiseach explained that the EU was united in its view that the Withdrawal Agreement could not be reopened,” the Irish government said.

“Alternative arrangements could replace the backstop in the future… but thus far satisfactory options have yet to be identified and demonstrated,” the Irish government said.

Ever since the 2016 EU referendum, the pound has gyrated to the rhetoric of the Brexit divorce: after the result was announced, it had the biggest one-day fall since the era of free-floating exchange rates was introduced in the early 1970s.

Since the 2016 vote, sterling has now lost 28 cents. It was trading at $ 1.2177 at 1230 GMT. It also fell sharply against the euro and the Japanese yen.

“We see little chance of Brexit fears calming in the near-term, and if anything will likely escalate further as we head closer to the October 31st deadline,” said Mohammed Kazmi, a portfolio manager at UBP which has $ 136 billion of assets under management.

BREXIT CRISIS

Sterling briefly shot as low as $ 1.1450 on Oct. 7, 2016 during a so-called ‘flash crash’ in Asian trading that lasted only for a few minutes. But otherwise, the fall under Johnson has brought it close to the 32-year lows struck in late 2016 and early 2017.

On entering Downing Street on Wednesday, Johnson set up a showdown with the EU by vowing to negotiate a new deal and threatening that, if the bloc refused, he would take Britain out on Oct. 31 without a deal to limit economic dislocation.

Irish government bond yield spreads over Germany hit their widest levels in over a month on Tuesday, as worries grow over the potential impact of a no-deal Brexit on Ireland.

Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain’s economy into a recession, roil financial markets and weaken London’s position as the pre-eminent international financial center.

Supporters of Brexit say that while there would be some short-term difficulties, the disruption of a no-deal Brexit has been overplayed and that in the long-term, the United Kingdom would thrive if it left the European Union.

Johnson was expected to tell Welsh farmers on Tuesday they will get a better deal after Brexit, part of a countrywide tour to win support for his “do or die” pledge to leave the European Union by Oct. 31.

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British PM Johnson tells EU: ditch the backstop or there will be no-deal Brexit

© Reuters. Britain's Prime Minister Boris Johnson visits Birmingham © Reuters. Britain’s Prime Minister Boris Johnson visits Birmingham

By William James

MANCHESTER, England (Reuters) – British Prime Minister Boris Johnson cautioned the European Union on Saturday that the “anti-democratic” Irish backstop must be ditched if they were to strike a Brexit divorce deal.

Johnson, since taking office on Wednesday, has repeatedly said that if the EU continues to refuse to renegotiate the Withdrawal Agreement agreed by his predecessor Theresa May, then he will take Britain out on Oct. 31 without a deal.

His biggest demand is that the most hotly-contested element of the Brexit divorce agreement, the Irish border backstop, be struck out of the Withdrawal Agreement, a demand that has angered Ireland and perturbed other EU capitals.

“If we get rid of the backstop, whole and entire, then we are making a lot of progress,” Johnson said, when asked if it was only the Irish border backstop that he wanted changed.

Speaking before a Stephenson’s Rocket, a 19th century steam locomotive, in the northern England city of Manchester, Johnson dedicated most of his speech to improving public services, transport and the internet and driving up economic growth.

“Our post-industrial towns have a proud, great heritage but an even greater future. Their best years lie ahead of them,” he said, announcing new long-term rail links and promising immediate improvements to bus services.

That message, aimed at what Johnson called “left behind” towns, is seen as the early stages of an election campaign, even though Britain is not due a parliamentary election until 2022 and Johnson is adamant he will not hold one before Brexit.

His Conservative Party does not have a majority in parliament, is divided over how to deliver Brexit and under threat of a no-confidence vote when parliament returns in September.

ANTI-DEMOCRATIC

European leaders are prepared to talk with Britain’s new leader over Brexit but have so far insisted they will not reopen the Withdrawal Agreement. Many EU diplomats think the United Kingdom will hold a snap election soon.

Johnson, who discussed Brexit with U.S. President Donald Trump on Friday, brushed aside those concerns.

“My friends, I do not want a no-deal Brexit, that is not where we’re aiming, but we have to face the fact that at the moment we’re being told, as we have been told for the last three year ‘rien ne va plus’ – ‘the deal is fixed’ – and can’t be changed. I doubt that,” he said.

Nevertheless, investors fear a no-deal exit would send shock waves through global markets and hurt the world’s economy.

Ireland is crucial to any Brexit solution.

The backstop is an insurance policy designed to prevent the return of border controls along the 500-km (300-mile) land border between Ireland and Britain’s province of Northern Ireland that were ended by the 1998 Good Friday peace agreement.

Irish Prime Minister Leo Varadkar said the question of the unification of Ireland and Northern Ireland would inevitably arise if Britain leaves the EU without a divorce deal on Oct. 31.

“The approach of the UK government is not going to be disengaged or aloof or waiting for them to come to us: we are going to try to solve this problem and we are going to do it in a spirit of friendship and cooperation,” Johnson said.

“But we can’t do it as long as that anti-democratic backstop, that backstop that seeks to divide our country, divide the UK, remains in place,” he said. “We need to get it out and then we can make progress, I think.”

The Withdrawal Agreement that May struck in November with the EU says the United Kingdom will remain in a customs union “unless and until” alternative arrangements are found to avoid a hard border.

Many British lawmakers oppose the prospect of being bound to EU rules and customs duties that would prevent Britain doing its own trade deals and leave it overseen by EU judges.

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UK readies emergency transport to bring in supplies in no-deal Brexit

© Reuters. British government's weekly cabinet meeting in London © Reuters. British government’s weekly cabinet meeting in London

LONDON (Reuters) – The British government is drawing up plans to charter planes and ferries to ensure vital supplies such as medicines can be brought into the country if the government fails to secure a trade deal before leaving the European Union.

Cabinet Office minister David Lidington announced on Tuesday that the Department for Transport is leading a cross-government approach to ensure ministries have the capability to bring in supplies in the event of a no-deal Brexit.

Just four months before the United Kingdom is due to leave the world’s largest bloc, the risk of a no-deal Brexit is rising, with the leading candidate to be the next prime minister Boris Johnson saying he was willing to leave without a deal.

“Guaranteeing the supply of critical ‘category 1’ goods, including medicines, medical products, veterinary medicines and chemicals remains an essential element of the government’s No Deal contingency planning,” Lidington said in a statement.

“The government is therefore undertaking steps to secure freight capacity for suppliers of these goods in a No-Deal scenario.”

Britain’s transport ministry faced ridicule earlier this year after stacking up a 50 million pound ($ 63 million) loss for cancelling contracts to charter extra ferries to bring in essential supplies in the event of a no-deal Brexit.

The decision to award the contracts has been a major political embarrassment after it emerged the government handed out a 14 million pound contract for extra ferries to a company that owned no ferries and published terms and conditions on its website that appeared to be for a takeaway food business.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Sterling Rallies as UK Lawmakers Vote to Reject No-Deal Brexit

Investing.com – Sterling rallied Wednesday as U.K. lawmakers voted to reject leaving the EU without a withdrawal agreement.

U.K. lawmakers have voted by 312 to 308 for an amendment that ruled out the U.K. leaving the EU without a withdrawal agreement under any circumstances. The vote on the amendment is not legally binding, but lawmakers are now expected on Thursday to vote for a delay to Brexit on March 29.

rose 1.39% to $ 1.3256, while rose 0.43% to $ 1.1334.

The , which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.22% to 96.69.

The Labor Department said its for final demand increased 0.1% last month, but missed economists’ forecasts for a 0.2% increase. In the 12 months through February, the PPI slowed to a 1.9% increase, in line with expectations.

The Commerce Department said on Wednesday fell 0.1% in January, confounding economists’ forecast for a 0.1% rise. But non-defense capital goods orders excluding aircraft – a proxy for business investment – rose 0.8% for the month, handily beating expectations for a 0.2% rise.

fell 0.26% to Y111.07, but losses were in the pair were limited by falling demand for safe-haven yen as Wall Street rallied.

slipped 0.34% to $ 1.3306 as the loonie was boosted by surging oil prices on the back of data showing unexpectedly fell last week.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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UK would regret no-deal Brexit 'for ever': business minister

© Reuters. An anti-Brexit protester demonstrates outside the Houses of Parliament, in Westminster, London © Reuters. An anti-Brexit protester demonstrates outside the Houses of Parliament, in Westminster, London

By David Milliken

LONDON (Reuters) – Britain would permanently regret leaving the European Union without a deal, and parliament needs to reach a decision to stop this in the next two weeks, business minister Greg Clark said in a newspaper interview on Saturday.

Clark’s comments in The Times come as the paper reported government documents warning Britain’s transport system could get overwhelmed after a no-deal Brexit, while The Guardian said officials feared mountains of rotting waste and animal slurry.

Britain is due to leave the EU on March 29, but lawmakers last month comprehensively rejected the exit deal Prime Minister Theresa May reached with Brussels, and Brussels this week turned down May’s request for renegotiation.

Without a deal Britain risked major disruption to trade with the EU, cutting British business out of pan-European supply chains, Clark warned.

"If we make what I think would be a mistake that we would regret for ever, it would be in the history books just like the achievements of the first industrial revolution," Clark said.

Parliament needed to approve a deal by the middle of this month, he added, citing businesses that said they would be reluctant to ship goods to Japan or South Korea if it was unclear whether they would face tariffs when they arrived.

"People say ‘Things are always decided at the 59th minute of the 11th hour’. But it’s important to understand where ‘the wire’ is. The wire is not the 29th of March," Clark said.

May has promised another Brexit vote by Feb. 14.

Britain’s transport ministry is preparing for the knock-on impact of a no-deal Brexit overwhelming the transport system, according to a leaked document in The Times.

There have been widespread predictions of traffic gridlock on key roads in southeast England due to customs checks on trucks trying to cross the English Channel at Dover, Europe’s busiest ferry port.

The impacts "could fall across every transport mode … and could grow exponentially as … the capabilities of responders at all levels decrease or become overwhelmed," the document offering guidance to officials working in a planned emergency response center said.

The Department for Transport did not immediately respond to a request for comment.

Separately, the Guardian said environment officials were worried that Britain would struggle to export waste as well as livestock, leading to growing mounds of rubbish and slurry.

"Odors will obviously be an issue as the stockpiled waste putrefies," an internal email cited by the Guardian said.

Farmers unable to export sheep and cattle "may have problems with slurry storage capacity and insufficient land spreading capability", the email also warned.

An Environment Agency spokesman said a process was in place to ensure waste could still be exported after a no-deal Brexit.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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