What's going on?
The UK Parliament voted on Thursday evening to ask the European Union (EU) for permission to delay Britain’s withdrawal from the bloc.
What does this mean?
Earlier this week, parliament rejected the exit deal negotiated by the British prime minister for a second time. It also voted in favor of ruling out a “no-deal” departure, although this wasn’t binding: as things stand, the UK could still leave without a deal on March 29th.
Parliament now wants the prime minister to ask the EU to postpone Brexit until at least June 30th. But unless it backs her existing departure deal in a third vote planned for early next week, the requested delay could be much (perhaps 18 months) longer (tweet this). If parliament again declines to approve the Brexit deal, it’ll then hold a series of votes on what to do next. And there might end up being some public votes, too. A UK general election or even a second Brexit referendum could follow; and if Britain is staying in the EU beyond June, we’re likely, bizarrely, to see UK politicians standing in May’s European Parliament elections.
Why should I care?
For markets: All that stockpiling could go to waste.
British companies have been stockpiling goods recently, perhaps in anticipation of a no-deal Brexit making trade with the EU more difficult and expensive. With no deal now looking less likely – albeit not impossible – those surplus stockpiles might be released. This could see Britain’s recent frantic economic growth disappearing as demand readjusts.
The bigger picture: If tomorrow never comes…
A scenario in which Brexit never happens is not outwith the realms of possibility. While it remains unclear whether parliament would pass the necessary legislation, bookmakers are currently offering 2/1 odds on a second Brexit referendum in 2019 – and recent polling consistently predicts that Britain would vote to remain in the EU. Whether it’s coming or going, certainty over the UK’s future relationship with Europe would make investing in British assets considerably more predictable.