Vote of No Confidence called on PM May, so what happens next? Early reports suggest vote secret ballot will take place tonight between (6-8pm) If a majority of Tory lawmakers vote that they have confidence in May, she cannot face another such vote for a year. If a majority vote against her, she must resign as leader, and cannot run in the contest to replace her. Brady would then organize a contest for a new leader. May would be likely to stay on as prime minister until her successor was chosen.
The media has reported that up to 100 Conservative MP's will vote against the PM’s Brexit deal, leaving it a complete non-starter. PM May still has time to convince her MP's, but this is becoming even more unlikely after news broke yesterday that PM May has ruled out a Norway-style deal as a back-up plan if the government lose the vote in the House of Commons. PM May and the leader of the Opposition Jeremy Corbyn will have a televised one-hour Brexit debate on Sunday December 9th, just two days before the vote in Parliament. If PM May’s proposal is rejected, the Brexit negotiations may take another turn for the worse, impacting the value of Sterling.
As mentioned in yesterdays report, I wanted to explain what could happen over the coming weeks for those with exchanges that need to be completed by end of year or early January 2019. We now know the PM will spend the next couple of weeks trying to sell her Brexit deal to the UK public and, more importantly, the UK Parliament, warning that it is the best deal possible and that any other versions would hurt the UK economically. The vote in the House of Commons is now expected on December 11th and is expected to be rejected in its current state but then could be approved it on a second attempt amid market pressure, according to UBS Wealth Management’s chief economist Paul Donovan. He reckons that prediction is now the consensus view in financial markets. Thanks to Bloomberg here’s a rundown of how things are likely to unfold over the coming weeks, according to UBS’s house view, which Donovan set out in an interview in Brussels.
The US dollar moved slightly lower yesterday, while sterling received a lift from the latest Brexit news. The BoE’s hawkish comments on UK interest rates may also have provided some support to the pound. Today seems likely to be a relatively quiet end to the week as markets await the outcome of this weekend’s EU summit.
PM Theresa May was in Brussels yesterday and she is scheduled to return there on Saturday to finalise a deal on the outline of a future trading relationship with the EU. That, together with the Withdrawal Agreement, is expected to be signed off at a special EU-27 summit on Sunday.