Update 5 April 2019:
There hasn’t been a great deal of progress since this time last week. As it stands the UK has a week to sort themselves out; otherwise they will crash out of the EU with no deal next Friday the 12th of April.
Prime Minister Theresa May is currently seeking a further extension to the Brexit date from the EU. British MPs voted in 313 to 312 in favour of this extension. Ironic that they keep voting for extensions instead of making the most of the extra time they have been given to find a suitable withdrawal agreement.
Whether or not the United Kingdom is granted an extension is dependant on Prime Minister May delivering a credible and realistic way forward.
Update 2 April 2019:
After Theresa May’s withdrawal agreement was voted down for the third time last week, a result which waved the UK’s right to a May 22 extension, yesterday members of parliament held more indicative votes in the hope of finding a majority.
There were four indicative votes, none of which commanded a majority. The ballots and results included:
- The prospect of remaining in a Customs Union with the EU was so close, yet so far, as the idea was defeated 273 to 276.
- They said ‘yeah, nah’ to staying in both the Single Market and Customs Union, with a defeat of 261 to 282.
- Don’t even try revoking Article 50 either, because it was voted down 191 to 292.
- The thought of holding another EU referendum clearly left a bad taste in their mouths as well, losing 280 to 292.
Where does this leave the UK? Well, as my dad would say, they are well and truly up the proverbial creek without a paddle. They have less than two weeks until the April 12 Brexit deadline and are stuck in a pretty gnarly political deadlock. If they fail to find an agreement or secure another extension by April 10, the UK will crash out of the EU with a no deal. If they do achieve an extension, they will be required to take part in the upcoming European Parliament Elections.
Opposition leader Jeremy Corbyn is calling for a third round of indicative votes, and Theresa May is considering putting her withdrawal agreement forward for a fourth vote.
Despite this saga slowly killing the souls of those keeping up with the drama, the last few days of Brexit happenings have proven quite useful for the value of the Aussie dollar against the Great British pound. If you had exchanged $2000AUD for pounds last Wednesday the 27th of March, you would have taken £18.60 less then if you had traded the same amount today. To find out more, visit our pound currency page.
Update 29 March 2019:
Despite being 'Brexit day', the UK still has no idea what they are doing when it comes to Brexit. Luckily for them, they have been granted a few extra days to try and get themselves sorted. If British MPs can agree on a deal today, they’ll wipe the sweat off their brows proclaiming ‘phEU’, as they will have an extension until the 22nd of May. However, if they can’t agree on a Brexit withdrawal agreement (which is pretty likely based on past behaviour), they will only have until the 12th of April before the UK leaves the EU.
On Tuesday we explained that, on Wednesday, British MP’s were having some indicative votes to try and figure out what the majority wants. Eight votes were held, and none of which claimed a majority.
The air of uncertainty that came with this put downward pressure on the value of the pound, which was great news for the AUD and Aussie travellers (we need all the help we can get at the moment). Buying $2000AUD worth of pounds on Tuesday would have given you £1022. Purchasing the same about today would give you an extra £20 taking you to £1042.20. That’s an extra two pints at a pub in London - pints you might need to cope with all of the Brexit drama.
Considering none of the indicative votes were successful, British Prime Minister, Theresa May, will be putting forward another vote today in the hopes that they can secure the May 22 extension. This vote will be slightly different to the others though, as they would only be voting on half of the deal.
The current withdrawal agreement is made of two parts:
Part one - The Withdrawal agreement. This is a legally binding document setting out the terms of the UK’s departure from the EU. It includes a settlement, information on what the transition period would look like, protection of citizen rights and the controversial Irish backstop.
Part two - The Political Declaration. This outlines the future relationship between the UK and the EU after Brexit and is not legally binding.
Theresa May plans only to put part one forward to vote which is causing quite the stir amongst MP’s. In addition to this, Prime Minister May has also stated that she will resign if her Brexit deal is agreed upon by MPs. This will allow someone else to lead the remaining negotiations with the EU.
Should they agree on part one, it will technically grant them the extension until May 22; however, it would not ratify the deal as they need part two of the agreement for that to occur. The Government would then need to pass part two of the agreement, or change the law so that part two isn’t necessary to ratify the deal.
If MPs don’t agree on part one, then the UK will only have until April 12 before they leave the EU. This will most likely lead to more ‘indicative votes’ on Monday, and the prospect of a ‘no deal’ will become more of a reality.
Update 26 March 2019:
Overnight, the United Kingdom parliament won a vote that will temporarily allow them to take control of the government on Wednesday. Before we delve into what this means, let’s just do a quick recap on the differences between parliament and the government.
Government: runs the UK and parliament
Parliament: comprised of the House of Lords and the House of Commons. Members of Parliament and Lords that aren’t part of the government. Parliament monitors and scrutinises what the government is doing.
In essence, the Government can’t make new laws or raise taxes without Parliament giving the nod of approval. Despite this, Government officials (like Prime Minister Theresa May) are still the big dogs calling the shots. The Government also controls what is debated in Parliament.
If we roll back to last night’s events, MPs voted to take control of Parliament on Wednesday to vote on potential amendments to the government's current withdrawal agreement. They may vote on up to seven different options, including a second referendum, leaving the EU with no deal and giving the UK full access to the EU single market.
These are called indicative votes. They aren’t legally binding, so the Government doesn’t have to follow through with the results, however, they are a pretty good indicator of what commands the majority in Parliament.
Wait a minute...
Hang on, haven’t they already voted on a number of these options? Essentially, yes.
As it stands though, the British Parliament is in a pretty gnarly deadlock over this whole Brexit ordeal, so they are hoping to gain insight into what the majority wants through these votes. Of course, they run the risk of having no majority at the conclusion of these votes, thus remaining in the said political deadlock that continues to waste everyone's time.
Apart from the indicative votes, Wednesday will also see MPs discuss and vote on removing March 29 from UK law as the day they leave the EU. Prime Minister May is hoping to pass new legislation that will align the UK’s departure with the EU’s decision last week. If the legislation is successful, the earliest Brexit will happen is 11pm on the 12th of April, just over two weeks from now. Any later than this and the UK faces the prospect of taking part in the EU elections.
Meanwhile, a petition to revoke Article 50 and remain in the EU is nearing 5.5 million signatures from UK citizens...
If you’re planning on braving Britain’s current political landscape with a jaunt to the UK, we recommend checking out how Brexit may affect your travel plans.
As you would imagine, the changing political climate is also having an effect on the value of the pound against the Aussie dollar. The last few weeks/months has shown the pound strengthen when the government indicates they are closer to a decision and further away from a no-deal. Aside from this, markets have very little idea of what will happen to the AUD/GBP as we quite frankly still have no idea what is happening with Brexit.
Update 22 March 2019:
Overnight the European Union met, and all 27 member countries signed off on a final statement regarding Brexit. This comes after British MPs voted last week to extend the Brexit deadline beyond March 29, 2019, as they have yet to approve any form of withdrawal agreement.
The EU has stated that should British Prime Minister Theresa May not win approval from MPs for her current withdrawal agreement (an agreement which has already been rejected twice), the UK will be given until April 12 to decide if they are participating in European Parliament elections that start on May 23rd, 2019.
Alternatively, the EU will grant an extension until May 22 if the Withdrawal Agreement is approved by MPs next week. Despite May’s work to get MPs on her side in the next few days, it seems highly unlikely that this deal will be approved.
Furthermore, despite British MPs voting last week in favour of avoiding a no-deal situation, if an agreement is not reached next week, the chances of a no-deal increase significantly. This is likely not in the best interest of the UK, Europe and the wider global economy. In particular, Australia’s economy could feel the negative flow-on effects. This could potentially put long term downward pressure on the value of the AUD.
Update 19 March 2019:
After last weeks string of votes that really didn’t get us any closer to Brexit certainty, the next big Brexit event is this Wednesday 20 March. This comes before the European Council Summit on Thursday and Friday.
Prime Minister Theresa May was originally hoping to have another meaningful vote on her Brexit deal this Wednesday; however, overnight House of Commons Speaker John Bercow ruled that the government cannot ask the house to vote on the same (or substantially the same) Brexit deal as last week. Makes sense really.
Bercow added that, “this ruling should not be regarded as my last word on the subject. It is simply meant to indicate the test that the government must meet in order for me to rule that a third ‘meaningful vote’ can legitimately be held in this parliamentary session”. In other words, don’t waste Parliament, and the UK’s time, by making them vote on something they’ve already said no to. Ain’t nobody got time for that.
Prime Minister May must now seek significant changes to her deal. This may prove difficult as the EU has repeatedly stated that their negotiations on the Withdrawal Agreement have concluded. If May can’t change their minds, particularly when it comes to negotiations on the Irish backstop (a key point of contention amongst British MPs), chances of her plan being approved are pretty minimal.
Currently, the media is reporting that May will ask the EU for a nine-month extension. That means another nine months of uncertainty around what Brexit actually means for the UK and its rippling effects on the global economy.
On top of this, Britain is also faced with the following possibilities:
- A leadership challenge
- A general election
- A second referendum on Brexit
- Revoking article 50 and stopping Brexit all together.
MPs are relying on the fact that they will have more time to get this sorted, however, the extension to the Brexit deadline must still be unanimously agreed upon by all 27 countries of the European Union.
Should the nine-month extension not be approved, the UK will have a week to pull a rabbit out of a hat as they leave the EU on March 29, 2019.
Update 15 March 2019:
One currency that has not been particularly steady this week against the AUD was the Great British pound. You could compare its movements to one of those spew inducing rides that throw you up and down rapidly, without any real consideration for the riders enjoyment.
Whilst we can’t reduce that sick feeling you get after said ride, we can give you some peace of mind with currency movements. Simply add Rate Guard
to your purchase in store. If the exchange rate shoots up within 14 days of purchase we will refund you the difference*. The best bit? It’s free!
So what exactly happened with Brexit to cause such rapid changes in the exchange rate? Look, if we are being honest it was a lot of meetings that resulted in British MP’s, and the rest of the world, still having no idea what is going on with Brexit. We’ve tried to summarise it as much as possible below:
Keep in mind that the votes happened in UK time which is overnight for Aussies. The fall in value we saw on the 13th (Wednesday) would have left you taking £18.40 less pounds when exchanging $2000AUD, compared to the day before.
After three days of votes, we are only slightly closer to knowing what is happening with Brexit. Thankfully a no-deal has been ruled out. This is not only good for the UK but also Australia, as we would have felt the negative flow-on effects. Whilst the UK has agreed to extend Brexit, they still need to get all other 27 nations in the European Union to unanimously approve it.
Long story short: there were three votes where lawmakers decided to rule out a no deal and extend a process that has been going for 2 weeks. So, much of the same really.
Update 12 March 2019:
British Prime Minister Theresa May has concluded talks in Strasbourg with the European Union. Reports are surfacing from Cabinet Office Minister David Lidington in a statement to Parliament that May has “secured legally binding changes” to “strengthen and improve” the UK’s current withdrawal agreement.
These changes will not necessarily affect the current terms of the withdrawal agreement, rather just offering some legal assurances to back it up. In essence, the changes will provide some legal guarantees and a bit more clarification.
This information provided a boost to the value of the GBP. This was not ideal for the Aussie traveller, who could get £1,041.80 exchange $2000AUD yesterday, compared to £1,033.80 today; a difference of £8.
British MPs are now set to vote on the said deal Tuesday UK time. If the agreement is not passed, there is likely to be a string of other votes throughout this week to rule out a no-deal Brexit and potentially extending the March 29 deadline altogether.
Update 8 March 2019:
Only 20 sleeps until Brexit! As the UK and global citizens alike countdown the days until Brexit, British MPs still really don’t know what is happening with this whole ‘leaving the EU’ thing.
Despite sounding like a broken record, there really is nothing different to report from this time last week. Prime Minister May will face MPs next Tuesday (again) in the hope that they will vote in favour of her Brexit agreement. Should this deal get voted down, MPs will most likely vote on Wednesday to remove the possibility of leaving the EU with no deal. If this vote is successful MPs will then have another vote on Thursday on whether they should ask the EU for an extension.
Three votes in one week? Sheesh, the poor MPs might actually have to do their job and make a decision! Crazy, I know. Here’s hoping they can pull their fingers out and place their votes with Britain’s best intentions in mind. Either way, this time next week we should have a much better idea of the UK’s trajectory in regards to leaving the EU.
The value of the AUD against the pound has seen a steady decline since a peak on the 3rd of December 2018, where one Aussie dollar would buy 0.5554GBP. Today’s rate of 0.5151 is significantly lower, and would see you taking £80.60 pound less if you exchanged $2000AUD now compared to December 3rd. The pound’s renewed strength can most likely be attributed to the fact that leaving the EU with no deal is becoming less of a possibility. The Aussie dollar has also been facing its own battles irrespective of Brexit, which has put further downward pressure on its value.
Update 5 March 2019:
The GBP has shown a little bit of strength over the last couple of weeks as the chance of a hard Brexit has reduced significantly. Good news for the UK, however, not so great for Aussie travellers exchanging their AUD.
It sounds like the Withdrawal Agreement (WA) has a great chance of being agreed upon or at least gaining a majority after the next vote on March 12th. This comes after the lead Brexiter group appeared to have softened their opposition to Prime Minister Theresa May’s current WA. Ministers are also seeking to secure some legally-binding changes to May’s current deal that will make it more appealing to MPs come vote time.
Should the WA be voted down next week, May will bring forward a vote to delay Brexit in order to avoid crashing out of the EU with no deal.
Either way, there is unlikely to be any clear direction for GBP movements until a decision has been made to either accept the current agreement, leave the EU with no WA, or delay a decision and Brexit all together.
Update 26 February 2019:
Overnight, Labour leader Jeremy Corbyn announced his party would back a new Brexit referendum. This would only occur if the Conservative government failed to accept Labour’s current plan that includes a permanent customs union with the European Union, continued workers’ rights that mirror those of the EU, and close ties with the EU single market (in other words, better trade deals).
If British Prime Minister Theresa May does not accept these alternative Brexit deal amendments, Corbyn will begin his push for a second referendum.
This comes as PM May faces growing pressure to close a deal or seek an amendment of Article 50 to avoid the United Kingdom jumping out of the EU aeroplane with no parachute (or deal) on March 29 2019, the current Brexit deadline.
Despite MPs calling for another meaningful vote as soon as possible, Theresa May has announced the next vote will be on the 12th of March. This gives the UK 17 days to sort themselves out before they leave the EU. The countdown is on!
Sure, 17 days sounds like a lot. However the UK has had two years, or 730 days, to get their act together. Time is running out, and all politicians have done for the last month or two is talk and talk without actually deciding on anything.
Update 22 February 2019:
British Prime Minister Theresa May is facing another string of walkouts from the Conservative party as they protest the country’s current trajectory toward a no-deal Brexit.
Next Wednesday will see British MPs face (another) vote in which many are seeking a delay to Article 50, as well as a rule out of a ‘no deal’.
Prime Minister May has already survived two rounds of resignations and is currently working to secure changes to the current withdrawal deal with the EU in hopes of Parliament approving it.
Long story short, there has been a lot of political talk and power plays, however, Britain is still no closer to any sort of Brexit agreement. This will continue to affect the value of the pound as markets digest the constant stream of political dribble that is coming out of the UK.
If you are travelling to the UK soon, it’s definitely worth keeping an eye on Brexit happenings (as painful as that might be) to take advantage of any dips in the value of the pound against the AUD.
Update 19 February 2019:
The biggest Brexit news since we last spoke, was the departure of seven members of the UK’s Labour party, who have left to assemble their own political grouping called the “Independent Group”. These seven members are said to be extremely dissatisfied with Labour’s leadership with regard to Brexit, particularly the failure to call for a second referendum.
With this in mind, there is an increasing likelihood of a delay to Brexit (extension of Article 50) and a second referendum.
In other news from the UK, Honda also announced plans to close its UK factory with Japan-based manufacturing to take over for the European market. While Honda made it clear that this decision was based on global trends and not Brexit, it’s probably fair to say Brexit was at least part of the reason they drove out of the UK market.
Update 15 February 2019:
In ongoing Brexit news, Britain's parliament has voted (303 to 258) against a motion endorsing Prime Minister Theresa May’s “Plan B” approach to resolving the Brexit deadlock.
It looks as though Parliament will take control of the process from 27th February, as the latest vote has effectively stripped May of the political mandate to demand the changes to the withdrawal agreement.
With just over a month until Brexit d-day, it’s imperative that British Parliament gets a move on with negotiations.
Update 12 February 2019:
Unsurprisingly, the UK is in the same position as it has been for the last few months. With Brexit less than 50 days away:
- MPs are unaccepting of Prime Minister May’s proposed withdrawal agreement
- PM May is seeking concessions from the EU that they are unlikely to actually give
- Everyone (or almost everyone) is pretty concerned at the prospect of leaving the EU with a no deal.
PM May is scheduled to give an update to the UK parliament on Tuesday (Wednesday Australia time). After this update, Parliament will debate and draft amendments in the hope that MPs will have more say over Brexit.
A vote on these amendments is then scheduled for Thursday the 14th of February. This isn’t a ‘meaningful vote’ though, so it’s not final. A vote in the final agreement won’t happen until the end of February... with Brexit taking place on March 29. Talk about leaving your assignment to the last minute.
Theresa May has been accused of delaying Brexit proceedings altogether in hope that MPs will have no choice but to vote for her deal or face a complete no deal.
To add to the stress, Britain is seeing its worst economic data since 2012. In the last quarter of 2018, economic growth slowed to 0.02%. In addition to this, business investment continues to fall. In other words, Brexit is causing the UK economy to shrink.
All of this is contributing some pretty hefty downward pressure on the value of the GBP. Long story short, the AUD might not be performing too well at the moment, but we are doing slightly better than the poor old pound.
Who would've thought that failing to make a decision after two years would be bad for the economy and currency. ¯\_(ツ)_/¯
All I can say is Godspeed, Britain. With a strong emphasis on the speed bit.
Update 8 February 2019:
British Prime Minister Theresa May's mission to Brussels to discuss amendments to the current divorce agreement ended with no sign of a compromise. Honestly, this is just not fun for anyone involved.
This will force May and senior EU leaders back to the negotiating table to try and break the impasse. On February 13, PM May is scheduled to update British Parliament on the status of her efforts to unlock her Brexit deal.
As the March 29 deadline approaches, there is still no certainty that Britain will avoid crashing out of the EU with a no deal - the default option, should an agreement not be reached.
The level of uncertainty surrounding Brexit has pushed the Bank of England to reduce their UK economic growth forecast in 2019 to 1.2%. This would be England’s slowest rate of growth since the financial crises in 2011.
Update 1 February 2019:
British MP’s voted on Tuesday on a number of amendments to the current Brexit withdrawal agreement. There was a resounding push for changes to the Northern Ireland backstop. As a result, Prime Minister Theresa May will spend the next few weeks negotiating with MP’s and the European Union on a new deal.
This is troublesome considering 1. The EU has already stated they will not renegotiate the current deal, and 2. Brexit is now less than two months away.
Update 29 January 2019:
The UK House of Commons will vote on a number of amendments to Prime Minister May’s defeated Brexit deal
today (Wednesday morning Aussie time).
Here is a quick summary of what’s on the table.
Stop a no-deal by delaying Brexit
As it stands, the United Kingdom will leave the European Union on March 29, 2019 regardless of whether there is a ‘divorce deal’ in place. The prospect of leaving the EU without a deal has been widely touted by politicians to be rather tumultuous and not in the best interest of Britain and its economy.
Should there be no approved exit deal by the end of February, Labour MP Yvette Cooper is hoping for an amendment that would delay the Brexit date. If this is passed, the amendment will be legally binding on May’s government.
Saying no deal to a no deal all together
Further to Cooper’s amendment, conservative MP Caroline Spelman is calling on Theresa May to rule out a no-deal Brexit all together.
This argument doesn’t have the same legally binding ramifications as Cooper’s, so it is more likely to gather the support of more MPs.
Power to the backbenchers
Normally the government controls the agenda in the House of Commons. This means backbenchers don’t get a chance to dictate parliamentary business or put bills on the table.
This amendment would allow MPs to raise different Brexit motions for six days of debate prior to March 29, giving them the chance to vote on alternatives to the current deal.
A vote on a new deal or referendum
You guessed it; this means, parliament would have a vote on all possible Brexit options, including a second referendum.
Getting a ‘Citizens’ Assembly’ to decide
The government would form an assembly of 250 members that comprise a representative sample of the population. This lucky group would then be asked to consider the Brexit process, provide recommendations and report back.
Re-writing the Northern Ireland backstop
MPs are seeking for PM May to either put a time limit on the current Northern Ireland backstop plans or replace the backstop entirely with alternative arrangements in an effort to avoid a hard border.
The level of uncertainty surrounding Brexit continues to affect the value of the pound. It will be interesting to see what comes out of the upcoming meeting and how the result fluctuates the pound.
Update 8 January 2019:
UK Prime Minister, Theresa May, has finally announced a date for British MPs to vote on her Brexit deal after postponing the original vote, scheduled for the 11th of December 2018. The new vote will take place next Tuesday 15 January 2019 (Wednesday 16th Australian time).
Should there be a majority vote against the proposed deal, the prospects of leaving with a ‘no-deal’ will become much higher. In preparation for this instance, over 200 MPs have already signed a letter urging May to rule out a no-deal all together.
On the flip side, many conservative MPs are actively calling for Britain to leave without a deal. They argue that May’s current deal is not reflective of the Brexit that citizens originally voted for in the referendum. Leaving without a deal means the UK would automatically fall back on the World Trade Organisation rules.
We will just have to see what will happen with next week's vote, as the decision will have a major impact on how Brexit continues to unfold.
Update 13 December:
Yesterday’s vote of confidence against PM Theresa May saw her win 200 votes to 117. Whilst this is positive for her, it still means she doesn’t have support from a third of her party when it comes to negotiating and passing the proposed Brexit agreement.
Her win may have removed some of the uncertainty surrounding her Party’s (the Conservative Party) leadership in the UK, however it came under the promise that she will not stand for re-election. It appears she has taken this short term win in the hopes that she will be able to get the Brexit agreement across the line, ready for the March 29 Brexit deadline.
This win for PM May translated into a win for the pound, pushing it up slightly. Against the AUD, the pound went from 0.5528 to 0.5489. If you were exchanging $2000 AUD to pound today compared to yesterday, this rate change means you’d be getting approximately 7.80 pounds less - or a pint at the pub. Whilst this drop wasn’t the best for Aussie travellers, I wouldn’t stress too much yet.
After the December 11 deadline for MPs to vote on the Brexit agreement was delayed earlier this week, we still do not have a date for the vote to take place. This, coupled with the continued speculation about the Brexit deal being passed means the pound still has a long road paved with market volatility ahead.
If you do need to purchase GBP in the next few days, we recommend adding Rate Guard on to your transaction in store. Not only is it free, but if the Aussie dollar improves against the pound within 14 days of purchase we will refund you the difference*.
Summary: May stays but the UK's still leaving.
Update: 11 December
Today, British MPs were supposed to vote on the current Brexit deal. However, after expectations that the deal would have 187 votes against 419, UK Prime Minister Theresa May has delayed the vote to avoid the almost certain defeat. To put the number into perspective, the deal needs 320 votes to pass.
So, where does this leave the UK? Not in a great position if we are being honest.
There is no majority within the UK’s political factions that are in favour of any course of action. To recap, the potential options are:
A no deal. This would see the United Kingdom leaving the EU with nothing but their dreams, some debt and a good cup of tea. Definitely no trade deals, border negotiations or things that are quite important for the wellbeing of the UK’s economy and best interests of the citizens.
Joining the European Free Tree association. Once again, there is no real majority in favour of this.
A people’s vote on a Brexit agreement.
A second referendum to see if UK citizens are still in favour of leaving the EU. While some of the population could vote differently in a second referendum, obviously a second referendum undermines the original referendum at a considerable cost to the UK’s economy. According to a written statement to Parliament from March 2016, the estimated cost of conducting the original referendum was a whopping £142.4m. Imagine paying that bill again.
Most citizens and politicians alike are against a no deal, but also have no alternative as to what a deal should look like. It has been confirmed that the UK can decide not to leave the EU if they wish, however the EU has made it clear that they will not renegotiate the withdrawal agreement. Crikey.
The lack of support for any of the options has resulted in the odds of a no deal rising exponentially. It is also highly likely that the March 29 Brexit deadline will be extended.
If you haven’t already guessed, the UK government is in disarray at the moment. Or, as my dad would say, they are running around like a bunch of headless chooks. The prospect of a general election is becoming more likely, especially amidst calls for May to resign. If that’s the case, who would take her place, and would she ever get the chance to work in ye old London town again?
This growing mass of uncertainty has reflected on the pound’s performance, pushing it down lower against most major currencies.
If you’re travelling to the UK soon, it's definitely worth keeping a close eye on Brexit news to see how they are affecting the GBP. Maybe also take them some tea, everyone sounds really stressed over there.
Update: 29 November
Overnight saw the UK Treasury and Bank of England (BoE) provide risk assessments of potential Brexit scenarios.
The Treasury forecast that a ‘no-deal’ scenario would lead to a 9.3% hit to UK Gross Domestic Product (GDP) over 15 years. The BoE forecast the same scenario would lead to a 25% fall in GDP, thus resulting in a need for the Bank to increase interest rates to 5.5% to control inflation.
The Treasury didn’t forecast the recently agreed deal with the EU, however, a close variant was modelled. The model showed a 3.9% decrease in GDP over 15 years. Whilst this is definitely better than the consequences of a ‘no deal’, both institutions agree that the UK will be poorer economically under any form of Brexit situation, compared to just staying in the EU.
In addition to this, talk of a second referendum is continuing to grow. It will be interesting to see what happens in the coming weeks as Prime Minister Theresa May continues to rally MPs for support of the current agreement. Should May not gain enough support during the vote on 11 December, the UK will need to return to the drawing board and face the reality of a ‘no-deal’ scenario.
Therisk assessment scenarios did not have a major impact on the pound against the AUD; even so, the market will remain extremely cautious as we move through the next few weeks.
Months of negotiation have resulted in a draft withdrawal agreement covering Britain's divorce bill. The draft withdrawal agreement protects the rights of citizens affected by Brexit (Brits living in the EU and vice versa) and keeps the Irish border open for trade.
In an effort to get more time, both sides have agreed on a 21 month ‘transition period’. This will allow:
EU leaders gave their formal backing to the Brexit deal at a summit on Sunday 25 November. They also made it clear that there is no plan B except for a ‘no-deal’, should British MPs in the House of Commons reject the deal during a vote held on the 11th of December. Getting this deal approved will be challenging, with a number of MPs anxious about the proposal.
May must now spend the next few weeks selling the deal to MPs before the vote on December 11.