Duncan Donald

Wed, Oct 23

Johnson’s deal passes but as Brexit takes two steps forward a step back was almost inevitable

Finally, after 3 years and 3 Prime Ministers Boris Johnson has managed to put together a deal that gained enough support to be passed through Parliament. With the Prime Ministers relationship with coalition partner Northern Ireland’s DUP, all but ended, due to them feeling Johnson sacrificed the party in pursuit of agreement with the European Union, he has had to rely on the support of 19 Labour voters, who saw fit to go against their own party, to give their ‘Leave’ supporting constituents what they desired, as Johnson’s deal passed convincingly by 30 votes.



The good news was short lived, as in the second vote of the evening MP’s voted against the proposed timeline of the Prime Minister. His aim had been to complete Brexit by the October 31st deadline, ensuring the requirement for extension was not required despite him being legally forced to request one at the weekend. MP’s felt that this hurried approach was an attempt to force through a deal without due consideration and potential amendments.


The PM is thought to be doing this to stop opposition and internal doubters picking the deal to pieces and damaging the structure of the deal to the point the PM could potentially wish to pull it all together. It is thought that even some who voted in favour of the deal are doing so with a view to voting on amendments, with the possibility an obligatory referendum being one of them.


The PM’s immediate reaction is to hold off to see if and what type of extension the EU are prepared to offer, with Donald Tusk stating last night a longer extension to the end of January may be the favourable option. The expectation is that should we see a longer extension the PM would push for a General Election with the populist polls indicating a Conservative party win giving the majority he’s been lacking to date.



However, in order to achieve an election, the PM needs to gain the agreement of the Labour Party, and after being dismissive of Jeremy Corbyn’s attempts to agree a workable timeline for analysis of the new deal, they may be harder than ever to work towards agreement with.


Despite the fact we now have a deal that a majority seem content with for now, the markets hate uncertainty and with the extension in the hands of the EU, the deal open to amendments and the possibility of a general election, these threats have weighed on the Pound and the Euro alike trimming some of the gains seen around the turn of the week.


The fall isn’t retracing towards the lows of 1.2200 against the US Dollar because amid the current uncertainty, there has been progress of sorts but with the PM now reliant on the EU and Labour party to progress, that progress will be down a muddy path for now.