EU Response – For Now
Theresa May delayed the Brexit vote today in a clear attempt to buy more time for her piss poor deal. The EU response, for now is the EU won’t change the deal.
I suspect they will. Enough to matter? I don’t know. The mess is quite complicated.
EU Throws May a Lifeline
Earlier this morning I noted EU Throws Theresa May a Poisoned Lifeline: Court Rules the UK Can Cancel Brexit!
That opened up a huge number of possibilities.
- If the margin of defeat is slim, May will request a few tweaks from the EU and put it to vote again. It would pass the second time.
- May could resign.
- May could threaten to resign in an attempt to force Tories to vote for the deal or risk losing an election to Labour.
- Tories could stage a leadership challenge vote of no confidence (Only Tories vote). May would be replaced by a Tory vote.
- Parliament could stage a vote of no confidence (All parliament votes). If May failed, there would be new elections.
- May could threaten another referendum. Depending on the precise wording of the referendum, the EU might agree to go along with it.
- May could ask the EU for more time to work out a better deal.
- May could decide to do what she said all along: No deal is better than a bad deal.
- May could decide to request extension after extension until it appears a vote will go the way she wants.
- May or a new government might ask for another referendum.
I commented that I do not know how to handicap this, and I rather doubt anyone else does either. I still don’t, but I can say May has chosen option 7.
UK Bonds Yields Crash
Yield on UK 30-year bond came crashing down today as Theresa May Delays Brexit Vote.
“The yield curve is now on fire,” said John Wraith, head of U.K. macro rates at UBS Group AG. “The market clearly believes she will not get anything material enough from the EU to turn that scale of opposition around, so even if the vote is delayed it’s going to end in the same way — with a big defeat for the government.”
Thirty-year bond yields fell 17 basis points to 1.66 percent, the most since June 24, 2016, the day after the Brexit referendum. Those on 10-year bonds dropped 10 basis points to 1.16 percent, the lowest level since May.
Traders in money markets are now betting that the next interest-rate increase from the Bank of England will not happen until late 2020. The gap between two- and 10-year bonds narrowed three basis points to 49 basis points, the lowest level since July. That spread has been narrowing in the U.S., where inversions have been a historical indicator on recessions.
Despite Tusk’s response, I suspect the EU will offer some tweaks, but perhaps not until a first vote fails.
May tried to force a binary option: Hard Brexit or a deal. The ECJ threw May another lifeline and that opens up possibilities.
The best option for the UK now was the best option all along: Hard Brexit. There is nothing to fear. The UK and the EU both have a lot to lose if temporary measures to facilitate trade are not put in place.
In the case of a hard Brexit, I fully expect both sides to cooperate far more than they have up to this point.
Mike “Mish” Shedlock
Caution! U-Turn ahead…..
Leaving aside the argument of democratic primacy and the “people’s budget” for another occasion, please consider this rhyme
You will all note political stability in Europe is increasingly absent, whether by design or by failure. The yellow vests are one example, Catalan seperatism is also changing course to more confrontational, as are regional Spanish power balances and the effectiveness of current government. So we are looking at a western Europe in various open crisis, and of course Germany is simply absent for now. We are as always left to guess if this is all lack of coherent leadership, secular, or conspiracy.
“Theresa May delayed the Brexit vote today in a clear attempt to buy more time…”
May wishes to rearrange the deck chairs.
Titanic.
The nobility (bureaucrats) obviously know what’s better than the peasants.
May is like the Iraqi information minister when American tanks were driving in the background…
May is not a prime minister, she is a laughing stock.
EU laughed in her face, UK parliament laughed in her face, May’s deal is the most incompetent agreement in British history.
May’s deal would make UKa chained captive of EU with EU deciding when Britain can get out and there would be years of uncertainty and ever-increasing EU demands if UK accepted May’s dreadful deal.
Brexiteers need to vote her out now inside Tories and pick one of the brexiteers to lead and the leader has to take others in his team so they through this as a team and deliver Brexit.
Maybe May will try to get some more meaningless words added to the 26 page companion document that lists hopes and dreams and means nothing.
When the deal was deemed to be a failure this “barrel of dreams” (one EU prime ministers actual words) was concocted up to save May from her own incompetency by selling the bad deal with 26 pages of meaningless fluff.
Clearly the strategy is to delay as long as possible and hope for a new BREXIT vote with a different outcome.
They are playing with Fire. I think people are really starting to wake-up to the fact we don’t have any sort of democracy in the West.