With Brexit remaining at an impasse – and essentially in Limbo whilst the Conservative Party finalises its choice to replace Theresa May – traders on Smarkets’ Brexit Next Step market have been taking advantage of the breathing space afforded to mull over the next major development in what has become the UK’s greatest constitutional crisis in a century.
Smarkets has currently identified five major pathways for the next move on the complicated chessboard that Brexit has now become.
The first on its list – and the most likely outcome, having been evaluated at a probability of 36% – is an extension of the current October 31st deadline. However, Boris Johnson’s current leadership campaign has been pinned on his repeated assertion that he will not allow for the outcome should he become Prime Minister – itself something which now appears almost certain.
General Election vs No Deal
Leaving aside Johnson’s known history of opportunism, it does appear that his credibility – at least among those who are still willing to accord him some – now hinges on his ability to deliver on that promise. And according to some analysts, the same can be said for the fate of the Tory party itself.
And it is from here that traders appear divided on what we can then expect the subsequent outcome to be. With Smarkets indicating a current weight of 20.8% for an early General Election in contrast to 18.8% for a No Deal, predictive markets are essentially indicating that they are unable to decide between the outcomes, giving a reflection of the wider uncertainty that prevails.
However, the collective weight of an early general election and a No Deal scenario comes to twice that of a renegotiated deal with Europe and a second referendum.
So, whilst all options may remain on the table, it appears that a General Election and/or a No Deal appear to have emerged as the most likely candidates as the Brexit saga enters what will likely become its most critical phase in the second half of 2019.