The new Brexit pact reached between the European Union and Britain on Thursday will struggle to get through the U.K. Parliament. And for Boris Johnson, the U.K. prime minister, that might not be a terrible outcome.
Northern Ireland’s Democratic Unionist Party, which is part of Johnson’s ruling coalition, has said they won’t back the latest deal. The Labour Party also is opposed. On Johnson’s right, Brexit Party leader Nigel Farage has urged the U.K. Parliament to reject the new tentative deal reached between the British government and the European Union.
Johnson will need 320 votes in the U.K. Parliament for the Brexit deal to be approved.
Even if all Conservative Party MPs back the deal, Johnson will need help. “Johnson’s math has him needing 61 votes from a possible 85 and that will be a tall task as he is still seeing resistance from Northern Ireland’s DUP, the party that holds what many consider 10 critical votes,” said Edward Moya, senior market analyst at OANDA, a foreign currency trading platform.
Kallum Pickering, senior economist at Berenberg, said even winning over MPs Johnson kicked out of the party as well as Labour and independent MPs who previously voted for Theresa May’s deal, Johnson will still be short by 6 votes.
Constantine Fraser, political analyst at TS Lombard, points out that Johnson will now have this deal rather than a hard Brexit to run on if the U.K. were to hold a general election.
“The main takeaway is that the Conservative party is now committed to this deal, not no-deal, and will campaign for a majority for it if the coming general election takes place before the U.K. has left the E.U.,” Fraser said.
Oliver Harvey, macro strategist at Deutsche Bank, said the most likely outcome if the deal is not ratified would be a general election in November.
“If the government were to lose a ratification vote on Saturday, Prime Minister Johnson could request an extension to Article 50 from the EU27 and table a motion under the Fixed Term Parliament Act to hold an election in November. If opposition parties refused to vote for an election, he could resign and instruct his cabinet to do the same. The political pressure to hold such an election would be high, as a caretaker government formed under these circumstances would be seen as politically illegitimate,” he said in a note to clients.
Sky News, however, reported that Johnson has told European Union leaders he will not ask for an extension of the planned Oct. 31 exit date if Parliament doesn’t approve the deal. That’s despite Parliament passing a law saying he would have to do so in that situation.
The British pound GBPUSD, -0.2806% shot up as high as $1.2987 before trading lower.
The FTSE 100 UKX, +0.90% of top British companies on the London Stock Exchange rose 0.9%.
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