Analysts at Standard Chartered suggest that their central scenario is that a compromise will be reached between the UK government and European Commission (EC), but risks at either extreme (including ‘no deal’ or ‘no Brexit’) are rising as the deadline approaches with little progress in negotiations.

Key Quotes

“The UK government’s White Paper charts a middle course, but is a fragile solution that appeases neither pro-Brexit nor pro-Remain Members of Parliament (MPs); the EC is likely to have significant reservations too. Meanwhile, the Withdrawal Agreement is being stalled by the Northern Ireland border issue. The complexities of getting a deal ratified are significant, and the range of scenarios broad. There are two key points of vulnerability:

• A leadership challenge could result from concessions made on Northern Ireland - though Prime Minister (PM) May will likely resist a shift in the customs border - or freedom of movement. If enough Conservative MPs swing behind a challenger, May’s position would look increasingly untenable. A pro-Brexit leader would be more amenable to ‘no deal’.
• A final vote in parliament is needed by end-January 2019. The PM cannot rely on cross-party support and needs every Conservative MP to vote for the deal. May is likely to lose if she cannot persuade pro-Brexit MPs that the alternative to her deal is either extending Article 50, or a general election.”