Opportunity to Bank pips on The Suspension of UK parliament

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The brief explanation on Suspension of UK parliament

With just over two months before the deadline to leave the European Union, British Prime Minister Boris Johnson has made a dramatic move by asking Queen Elizabeth II to suspend Parliament. The queen has approved his request.Johnson, who has been Britain’s leader since July, told reporters on Wednesday that his move to close Parliament — known as “proroguing” in formal British political lingo — would allow his government a fresh start to set out its “very exciting agenda.”
Boris Johnson has a plan for making the best possible use of his government’s limited time: Give parliament an unrequested, five-week vacation starting the second week of September.
By suspending Parliament between Sept. 11 and Oct. 14, as Johnson has proposed, politicians would have far less time to try to stop or stall Britain’s likely exit from the E.U. which is expected Oct. 31.
Economists at Berenberg Bank note that there are at least three flaws in this logic:
1. The E.U. is already taking the hard-Brexit risk seriously.
2. Even if Johnson tries to ramp up the pressure, the much bigger E.U. would still believe that the U.K. has much more to lose from a hard Brexit than the E.U.
3. The move strengthens the E.U.’s suspicion that Johnson’s prime motive is to win a snap election shortly after Brexit rather than to conclude a deal with the E.U.
The third point gestures towards an alternative explanation for Johnson’s action: It is intended to spark a parliamentary revolt — so as to trigger a new general election. In this view, the suspension of parliament will force lawmakers to accelerate their plans for legislatively preempting a “no deal” Brexit, and/or organizing a vote of no confidence in the government, which would clear the way for Johnson to run a populist campaign against the parliamentary Establishment this fall.
The Pound fell sharply when news of the impending suspension first broke, with markets gauging that the Brexit pendulum was once again swinging back towards a 'no deal' Brexit.For GBP to recover the fall the rebel anti-no deal MPs will have to get their acts together in the first weeks of September. No more delaying," says Jordan Rochester, a foreign exchange strategist with Nomura.
Two UK courts will hear urgent appeals that will try to undo the suspension of parliament. Negotiations continue between EU and UK officials, with special British David Frost scheduled for more meetings. Brussels wants to hear fresh proposals from the UK about the controversial Irish backstop.

Published: 2019-09-04 10:10:09