March 29, 2019 / 7:46 AM / 6 months ago

Softer, later Brexit likely if parliament defeats Withdrawal Agreement - Goldman

FILE PHOTO: Britain's Prime Minister Theresa May leaves 10 Downing Street, as she faces a vote on alternative Brexit options, in London, Britain, March 27, 2019. REUTERS/Alkis Konstantinidis

LONDON (Reuters) - Goldman Sachs on Friday said a parliamentary vote on Britain’s Withdrawal Agreement with the European Union, without the Political Declaration alongside it, could convince more lawmakers to support Prime Minister Theresa May’s Brexit deal but will be a close result.

“Friday’s parliamentary vote on the Withdrawal Agreement in isolation will not be an easy victory for the government, by any means,” wrote Goldman Sachs Europe economist Adrian Paul.

The separation of the Withdrawal Agreement from the Political Declaration could tempt more lawmakers - both those from opposition parties and eurosceptics in her own party - to back May, Goldman Sachs said.

“The government’s calculation seems to be that, when faced with a choice between leaving the EU without an exit deal, delaying Brexit and participating in European elections, and leaving the EU in advance of European elections — with an exit deal, but without clarity on the precise Brexit destination — a cross-party majority will emerge in favour of the third option,” wrote Paul.

If the Withdrawal Agreement is rejected, the bank sees a significant increase in the risk of a long extension and a “fundamental” Brexit renegotiation on the basis of new, softer, options, along with a “substantial” increase in the likelihood of a snap general election.

Goldman Sachs still sees a 15 percent chance that Britain leaves the EU without a deal, a 35 percent chance that Britain’s decision to leave the EU is overturned, and a 50 percent chance that lawmakers eventually agree on a close variant of the current EU Withdrawal Agreement.

Reporting by Helen Reid; Editing by Elisabeth O'Leary

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