Kristian Rouz — European businesses have seen the odds of a 'hard Brexit' decline following the EU's proposal to extend the Brexit deadline until 22 May. The new report comes despite a separate statement from EU officials, saying the Brexit deal — twice-rejected by Parliament — would not be subjected to 'significant changes' during the extension period.
According to data from one of Europe's largest online exchanges, Betfair, chances of a 'no-deal' Brexit have tumbled to just below 5 percent. However, the 'implied probability' of a 'disorderly' divorce was seen as 27.5 percent — taking into consideration the lingering cross-Channel diplomatic tensions, as well as heated political debates in Westminster.
"Last night's move by the European Commission has lowered the immediacy of hard Brexit risk next week," Jordan Rochester of Nomura FX said. "But 'no-deal' can still happen if Theresa May were to wish it, either next week or on 12th April."
Betfair is a peer-to-peer betting exchange, which is used for smaller-sized financial transactions across Europe. Its data — published Friday — sharply contrasted with a series of reports from investors and wealth managers, as well as the UK's Defence Ministry, who all say a 'hard Brexit' is now a more realistic scenario than ever before.
For their part, Defence Ministry officials launched 'Operation Yellohammer' from their Whitehall bunker. The MoD said it is "always willing to support wider government planning for any scenario".
In this light, experts have provided their assessments of the possible risks and benefits of a 'no-deal' scenario. Over the past two-and-a-half years, multiple reports claimed the political chaos that entailed the June 2016 referendum would ruin the British economy.
However, latest data has suggested otherwise, prompting experts to claim a 'no deal' would hardly derail the ongoing economic resurgence in the UK. This is mainly due to the British government's inaction and non-interference with the economy — which after many years of over-regulation has been left alone.
"By most economic measures, Britain's economy is performing far better than comparable economies across the channel in mainland Europe," Simon Constable of the Johns Hopkins Institute for Applied Economics wrote. "As they say on Wall Street, gridlock in government is good because it means our politicians don't do anything bad."
Indeed, the latest data has suggested Britain is currently outperforming its peers on the continent, such as Germany, France, and Italy, in terms of both GDP growth and labour market strength. The Office for National Statistics (ONS) recently reported that economic growth stood at 0.4 percent in February, while the German government expects 0.2-percent growth for the same period.
As for the UK's post-Brexit prospects, experts believe the country is poised to fare slightly better than the EU due to its looser regulations and a higher investment appeal — despite the speculation about the damage that a 'no-deal' could inflict on Britain's financial services.
"Any manager moving people to the EU from London will likely find themselves bogged down in onerous regulations, and may want to quickly flee back to 'Blighty' as Britain is called," Constable wrote.
Meanwhile, the EU's proposed Brexit delay until 22 May — on the condition that the proposed deal passes the Commons by then — has sparked little enthusiasm among MPs. If Parliament rejects the deal for the third time, which some say it likely will, PM May would have until 12 April to come back to the European Council with new proposals.
While Westminster is bracing for heated debates, there appears to be widening sentiment — the UK is inevitably and consciously heading for a 'no deal' as fears of a possible economic collapse have finally proven unsubstantiated.