According to some analysts at banks and consultancies, the Brexit deal of Theresa May, the Prime Minister of the United Kingdom, will be rejected for a third time in a meeting of the parliament that is scheduled to be held next week.
In a note to clients, the chief UK economist at Pantheon Macroeconomics, Samuel Tombs, wrote: “It is highly likely … that Mrs May will fail if she tries again.” His view was echoed by some analysts at Credit Suisse, ING, and Morgan Stanley while UBS said that “success is far from certain.”
Reportedly, PM May is planning to present a third meaningful vote — which is dubbed at the “MV3” — in parliament next week. She will be asking for the approval of the MPs to her withdrawal agreement. The first two votes — first last January and again on the 12th of March — were both notably rejected by huge margins.
While the substance of the deal of PM May will not have changed, what has been modified is the timetable of Brexit. Last Thursday, the MPs voted to request for an extension beyond the 29 March deadline. The British Prime Minister has said that she will request for an extension until the 30th of June if the MPs approve a withdrawal deal by the 20th of March. If not, she will be requesting a much longer delay.
The global head of macro strategy at UBS, Yianos Kontopoulos, stated: “The prospect of a longer delay and no-Brexit risk rising could still focus the mind of Brexit-supporting MPs to back the Withdrawal deal.”
Press reports imply that some hard-Brexit MPs who earlier voted to turn down the deal are already softening their positions.
In a recent note, Pantheon’s Tombs informed clients: “Some analysts think that Mrs May might be successful on the third attempt.”
It added: “The logic goes that [May] has lost so much control over her MPs — several members of the Cabinet defied the whip on [Wednesday’s] no-deal Brexit motion — that more Brexiteers finally will back the deal, knowing that only softer forms of Brexit, or no Brexit at all, are the alternatives.”
Tombs, however, is expecting that the deal will be rejected once again. He said that the deal of Theresa May continues to be an “anathema” to the Northern Irish Democratic Unionist Party (DUP), as well as an influential group of Brexit-supporting Tories, the European Research Group (ERG). PM May must win over both groups so that her deal may be passed.
Majority of the other city analysts share Tombs’ view. Credit Suisse said that it is “sceptical” that the deal will pass because of the continued objections of the ERG and the DUP.
Sonali Punhani covers European economics for Credit Suisse. He informed clients: “Our base case is that PM May’s deal gets rejected in Meaningful Vote 3 and the UK asks for a long extension of Article 50.”
Morgan Stanley believes that there is a 25 percent chance of May’s deal being approved next week. Jacob Neil, an economist wrote: “The government would have to attract more Labour rebels or the hardcore Brexiteers, neither of which looks likely to us.”
In a note to clients, a developed markets economist at Dutch bank ING, James Smith, stated: “In the end, it will come down to politics.”
He added: “Whether or not May’s deal succeeds will depend on a) whether the Brexiteers think there is a real chance of a long Brexit delay and b) whether they think Parliament is likely to rally around a softer Brexit alternative.”
He believes that Brexiteers will be unmoved on both points, implying another defeat.
The chief UK economist of UBS, Dean Turner, stated: “Ultimately we expect a Withdrawal Agreement to be approved at some point, but the already drawn-out process may have many more months to run before we get there.”