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Sterling Sinks As No.10 Threatens Election By Xmas If Brexit Vote Fails

Courtesy of ZeroHedge View original post here.

Update (0845ET): Cable is sliding after The BBC reports that a source at No.10 says "if Parliament votes again for delay by voting down the programme motion, and the EU offers delay until 31 Jan — then we will pull the Bill, there will be no further business for Parliament and we'll move to an election before Christmas"

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As we detailed earlier, after being twice stymied by the opposition during Saturday's historic session and again on Monday, UK Prime Minister Boris Johnson is facing the beginning of an accelerated series of votes with the ultimate goal of pushing his withdrawal agreement through the House of Commons this week, which would ensure that the UK leaves the EU at the end of the month.

However, some of the MPs who ostensibly support his Brexit deal apparently have reservations about this three-day "whirlwind" timetable. According to the Times of London, Johnson has been warned that his attempt to kick off the votes on the Withdrawal Agreement Bill Tuesday night will be met with defeat unless he agrees to a longer post-Brexit transition.

Nick Boles, a member of the group of Tory rebels who left the party last month, has proposed an amendment to extend the Brexit transition period until the end of 2022 unless MPs pass a resolution to cut it short.

Last night, Johnson's government officially published the "withdrawal agreement bill" for its first reading (of three). That bill is likely to pass its first vote on Tuesday (the "second reading" vote) thanks to the support of expelled former Tories and opposition rebels, despite confusion over Labour’s official stance on the second reading. Another vote on Tuesday over whether to approve the express timetable for the WAB (withdrawal agreement bill) could derail the prime minister’s Brexit dash, as several former Tory rebels have warned that they want to slow down the process to ensure the "proper scrutiny" is applied.

Rory Stewart, a former Tory who was expelled from the party last month, warned against ramming the bill through Parliament, arguing that it might "further undermine confidence in our institutions."

"That means delivering a deal with proper process and scrutiny. Ramming through the bill will further undermine confidence in our institutions. We must do this properly."

If the program motion – the technical term for the vote on whether to accelerate the process of passing the withdrawal agreement bill – fails, it will virtually ensure that the UK doesn't complete the Brexit process at the end of the month. The EU has so far held off on granting an official extension, since it's waiting on developments in Westminster.

The Tory whip has warned that the vote on the program motion will be tight, and that Johnson will need to pick up 20 opposition votes to offset votes from former conservatives.

However, since most sell-side research shops and the FT's vote tracker now believe Johnson has the votes to ultimately pass his Brexit deal – even without the support of the DUP and its 10 MPs – it's widely expected that any Brexit delay from this point onward would likely be brief. However, Johnson has reportedly warned MPs that he would abandon the bill if MPs force through amendments that are outside the scope of the deal with the EU. Opponents of Johnson's deal have also warned that they might attempt to amend it as it goes through the committee stage.

Of course, that could swiftly leave the UK in caretaker government/election territory, as analysts at DB warn.

Also, thanks to the transition period, Britain won't actually finish with the business of leaving the EU until the end of next year.

Johnson hopes to pass the WAB by end of day Thursday, giving the House of Lords a chance to vote on Friday.

Since Johnson is facing a punishing gauntlet of votes, yields on eurozone bonds dropped on Tuesday morning, reflecting the market's anxieties as the deadline approaches. The pound was also weakening early in the day in New York.

Here's a schedule of upcoming Commons votes (courtesy of DB):

Tuesday

12.30 p.m.: Second Reading debate starts

7 p.m.: Vote on Second Reading – the general principle of the bill

7.15 p.m.: Vote on Program Motion – the timetable for the rest of the bill’s passage

7.30 p.m.: (If Program Motion passes) Committee Stage begins

10.30 p.m.: First Committee Stage votes

Wednesday

After 12.30 p.m.: Committee Stage continues, with votes every three hours. Amendments on keeping the U.K. in a customs union with the EU and calling a second referendum are likely to appear

After Midnight: Committee Stage finishes

Thursday

After 11 a.m.: Report Stage begins. More amendments can still be proposed

After 5 p.m.: Report Stage votes

After 7 p.m.: Third Reading vote – the House of Commons’s final say on the bill

Ultimately, both the FT's vote-tracker and most sell-side research shops expect the a final vote on the withdrawal agreement to pass by a moderate margin.


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