Trial now

Stronger In a Range


Weaker In A Range


Ending The Week On A Soft Note


Bearish Risk Growing


Stronger, But Still Vulnerable


SP500 PE Ratio vs. CPI Inflation

By Kevin Woodfield and David Thomas
     LONDON/BRUSSELS (MNI) - The landing zone for a Brexit deal between the UK
and the European Union has disappeared from view as neither the UK government
nor Brussels cede real ground for compromise, MNI understands.
     UK Prime Minister Boris Johnson's Brexit deal offer, sent to Brussels
today, is seen as no more than going through the motions. Sources in Brussels,
with an eye to Remainers in the UK parliament, are now placing an 80-90%
probability of the UK leaving the EU without a deal on their growing conviction
that Johnson does not want one.
     Meanwhile, a centrally-placed Brussels source has conceded to MNI that the
so-called Benn Act, designed to stop the government leaving the EU with no deal
on 31 Oct. by extending the deadline, has taken negotiating pressure off
     Binary politics continue to drive the two main combatants in London into
more extreme positions:
     - In the blue corner is the UK government aiming to marginalise Nigel
Farage's Brexit Party.
     - In the red corner a larger crop of MPs, and possibly a parliamentary
majority, for whom a so-called 'soft Brexit' deal, in which the UK would be an
EU rule taker, is in many cases a fig leaf for the larger objective of remaining
in the EU. The EU-27, with Dublin to the fore, have yet to reach the point - if
they ever do - of abandoning the outright 'Remain' cause in the UK.
     MNI understands from well-placed sources in both Whitehall and Brussels
that Number 10 is not seriously engaged in seeking a deal.
     They say the UK government has not at any stage acted in earnest with its
non-binding 'non-papers', engagement in 'technical' discussions and now its
suggestion of customs infrastructure away from the internal Irish border to
replace the 'backstop', packaged with continuing EU single market regulatory
membership subject to a Belfast termination mechanism.
     Number 10 has presented itself as willing to do a deal in part to keep the
Cabinet and the wider parliamentary Conservative Party together. But the bigger
motive is to build an election narrative that Prime Minister Boris Johnson and
his team have tried everything to carve out a negotiated departure for the UK
from the EU only to be blocked at every turn by a 'Remainer establishment'.
     The tricky question for Number 10 is how to be sure of securing a November
or early December election and the best way to set it up. There are those who
think Johnson would be prepared to swerve the Benn law and lose, again, in the
Supreme Court to augment his case that he is on the side of the people against
     Whatever Number 10's tactics with regards to adding the judiciary to its
list of counter revolutionaries, Johnson is likely to be faced with either
writing an Article 50 extension-seeking letter to Brussels ahead of the Oct. 31
deadline or resigning to allow his opponents to muster an emergency coalition to
secure the extension. If a viable legal dodge exists, it remains locked inside
the Number 10 vault.
     Should Johnson send the letter, it may allow him to choreograph a limited
three-month extension of the UK's EU membership for the explicit purpose of
holding a general election. But even in this course of events, the UK government
could not be sure that the EU would not come back with a proposal, cooked up
with the UK parliament, for a longer extension to retain the option of a second
Brexit referendum.
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$B$$$,M$E$$$,MC$$$$,MT$$$$,MX$$$$,MGB$$$]