Brexit means Brexshit!
Confused? You certainly should be as the political game of betrayal over Brexit reaches its denouement.
In the very short term, markets (both fx and equity) are unfazed by the ‘deal’ being foisted on them, as they have already been softened up by the project fear propaganda – ‘any deal is better than no deal’. There will however, be major political consequences, which either get resolved quickly by Tory MP’s now, or by the electorate at the next general election in 2022, or probably earlier. What we are looking at is no less than a radical rebalancing of UK politics as conservatives face getting wiped out at the polls. Self-serving career politicians in Cabiinet may have been persuaded that there was ‘no choice’, but the >17m who voted for Brexit will see the way events were manoeuvred by those purporting to respect the vote, but only to achieve quite the opposite and will not forgive this betrayal lightly. As a brand, the conservative brand will be toxic and will necessitate something new, but also mean the prospect of a more fragmented political representation, which could consign the UK to possibly a heavily socialist ‘utopia’ under Chairman Corbyn or endless coalition governments, with all that means.
Within the next week, we will find out whether the May will be chucked overboard by her crew to save the ship, or whether events grind through to their grisly end. The first scenario will unsettle markets most initially (particularly fx), but would offer a cathartic purge and scope to deliver a deal with greater longer term certainty after that. The ‘follow-my-leader’ option of the former meanwhile, might feel more palatable in the short term, but offers a drip-feed of lingering uncertainty, with the UK shackled under an EU yoke of regulations on which we will have no say and which can be expected to be increasingly constructed to our disadvantage.
For Tory MP’s they ought to be in no doubt that this represents an existential crisis for their careers. Either they discard May now, or the voters will punish them at the polls at the first opportunity. The days of Nanny May claiming there is no choice but to accept her medicine and her, or get Corbyn, is about to be tested and it will be messy.