Weekly Outlook 11th March - 15th March.
The week ahead is (once again) a key one for Brexit but its hear at last. Meanwhile, the Chancellor of the Exchequer will give his Spring Statement. It is unlikely to herald any immediate policy actions, but will set the context for some important upcoming decisions.
So the day has finally arrived! On Tuesday the House of Commons will vote for the second time on PM May’s EU withdrawal deal. Depending on the outcome there may be further votes on Wednesday on whether a ‘no deal’ Brexit should be ruled out and on Thursday on whether the UK should ask for a delay to the Brexit date.
Ahead of tomorrow’s motion, reports suggest there has been no major breakthrough in talks between the UK and the EU. In particular there has been little sign of concessions from the EU on the Irish backstop deal. That is generally seen as crucial to the outcome of tomorrow’s vote. The consensus opinion is that Tuesday’s result is likely to be closer than the first vote in January when the Government lost by a record margin. As indications from previous votes, and indeed comments from many MP's, suggest that a majority in the HoC are against a ‘no deal’ exit, it seems logical to think that if Tuesday’s vote is lost the subsequent two votes will result in a majority to delay Brexit. However, NOTHING can be taken for granted and the range of potential outcomes is likely to keep markets on edge and very volatile to comments & rumors.
Any vote to extend Article 50 will have to be agreed by the EU-27, most likely at the EU summit the following week. The EU may want indications of the extent of any delay and the UK’s plan for reaching an agreement that is acceptable to Parliament before agreeing to this. However, it remains to be seen whether this week’s debates will provide clarity on the preferences of the majority of MPs.
With so much focus on Brexit this week, economic data will play 2nd best but could still cause movements in Sterling exchange rates. The most important data is due from the US (highlighted below) and on Friday from the Euro zone.