UK: Politics on the forefront - Rabobank

In view of analysts at Rabobank, it appears British PM Theresa was quite prepared to eat another hearty slice of humble pie in yesterday’s Brexit negotiations, offering to solve the Irish border issue by effectively giving the EU what they want – regulatory convergence between the two Irelands, which saw GBP jump as high as 1.3539 at its intra-day high.

Key Quotes

“She then got her junior coalition partners, Northern Ireland’s DUP, stuck in her throat. Indeed, the DUP rapidly shot down any chance of there being a hard border of any sort between it and the rest of the UK, meaning that the only other option is a hard border between Northern Ireland and Ireland, which while nobody wants, cannot realistically be avoided if the UK operates on different standards and external tariffs from the EU, and which diverge further as time passes. And so GBP sank once again, sitting at 1.3414 at its low.”

“As the UK Telegraph asks today, how did anyone who has paid any attention to Irish politics for the past half century fail to see this ‘surprise’ coming? More importantly, with that knowledge in mind --that what an Englishman can never remember an Irishman can never forget, as the old saying goes, for example-- where do we go from here? Well, logically only the following options are on the table:

• The DUP is made to accept the deal with oodles of cash and a promise to film the Game of Thrones spin-off series solely in the province;
• Theresa May finds a new government in days;
• The EU bends; or
• Hard Brexit looms”

“Given that the first is extremely unlikely (and prospects of it had already seen London and Scotland ask “Where is our separate deal?”), the second is virtually impossible, and the third is truly inconceivable, what does that say about the fourth? Of course, politics is the art of the possible, and we still have a few days left for some kind of Disneyesque Christmas miracle. Let’s all start humming ‘I believe children are the future’ or some-such schlock, and see if the magic arises.”