Mrs May faces a tough few weeks at work as Brexit shows no signs of allowing her some well-deserved festive respite. Her cabinet colleagues lobbied her to delay Tuesday’s Commons vote, and the BBC reported this morning that the EU were unwilling to amend any part of the deal.
Once she does goes ahead with the vote, if she still loses, the next steps are fraught with unknowns. Government whips will have been working furiously over the past weekend to bring any unruly Conservative MPs into line. The expensive possibility of a disorderly no deal cannot be ruled out and sterling fell as parliament turned the screws on the prime minister's plans this week. The well planned ruling from the European Court of Justice issued last Monday reveals a game of chess, where they stated that the whole thing could be called off without the revocation of Article 50 having to be approved by the European Union (EU)'s 27 members.
Mrs May maintained silence on any ‘Plan B’ to cover a Commons rejection of her EU deal, but Work and Pensions Secretary and perceived ally Amber Rudd aired the possibility of a Norway-style alternative in recent days. A past fractious week has been experienced with potential for market turbulence is in prospect for the next several days.
A Scrooge-like shadow over the markets
With a period that started with such optimism ended in disappointment as trade-war and US slowdown fears cast their shadow, Scrooge-like, over investors’ hopes for a year end “Santa rally”.
Fed Chair Jay Powell’s more dovish comments helped recover investor sentiment at the start of last week. But the sceptics remained convinced that the trade truce reached at the G-20 summit was just a quick fix, which may lead to heightened strains between the US and China further down the line.
Hopes for a truce were further undermined by the arrest of the chief finance officer (CFO) and founder’s daughter of Huawei at the US request, as she changed planes in Vancouver. The arrest, on Iran sanction busting charges, sparked a bitter diplomatic row, overshadowing what were already likely to be tough tariff discussions. The markets concerns, despite US claims the two can be separated, is that there will be little progress on trade until the Huawei incident is settled.
Beijing was quick to demand the release of the Huawei executive but, so far, President Xi has instructed his officials to follow through on the agreement made with the US at the G20. Still, markets may also be worrying about the long-term consequences of the arrest of Huawei’s CFO, which could be viewed as another move by the Trump regime to strengthen US defences against China’s global military, technological and economic ambitions.
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Information valid at 11th December 2018
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