TwentyFour Asset Management

A Prorogation of Parliament

TwentyFour Blog

Yesterday, the Queen approved a request from the Prime Minister, Boris Johnson (‘Bojo’), to suspend Parliament  from 10th September to 14th October. This means that when MPs return from summer recess next Tuesday, they could have as few as four days sitting in Parliament before it is suspended again. The Government have argued that this is following procedure – on average a Parliamentary session lasts a year and then is suspended before a  Queen’s speech begins a new session – the current parliamentary session has lasted two years. A new session allows the Government to outline its agenda, as well as resetting quotas for certain mechanisms such as Private Members’ Bills.

Unsurprisingly, the opposition parties have erupted in fury, arguing that the duration of suspension, which is slightly longer than usual, is an affront to democracy and a deliberate attempt to prevent Parliament from having its say on Brexit.

But what does this actually mean for Brexit?  There is still a chance the opposition could pass a bill blocking a no-deal Brexit before the suspension of Parliament, however, time is obviously against them.  There has also been suggestion that the parliamentary suspension could be overruled in court next week.  If these options fail, the opposition could be forced to call a vote of no-confidence in the Government, possibly as soon as the 4th September.  However, it is difficult to predict the result of this vote as this means Conservative dissenters might have to vote against their own Government, and could essentially open the door to a Corbyn-led Government. In addition, opposition leader, Jeremy Corbyn, has pulled back from the threat of this over the last month, indicating that he is not confident he has the numbers to win.

If a no-confidence vote is passed, there is a 14 day period in which the Prime Minister or any other MP can try to convince the Queen that they command the confidence of a majority in Parliament. The Prime Minister may be able to re-salvage a majority; Jeremy Corbyn has offered to form a National Unity Government; or Remainer MPs may unite around a figure such as Ken Clarke. If they do, this group can govern until a General Election in 2022. Once again, whilst there has been considerable pushback from MPs to a Corbyn-led Government, the idea of a ‘neutral’ Ken Clarke figure is an unknown in terms of the traction it would gather.

However, if no majority arises from this period; a general election will be called and if this is held after the 31st October, the UK could stumble out of the EU with no deal in the meantime. This is the huge dilemma for Remainers – they could effectively collapse the Government due to the fear of a no-deal Brexit, only to then cause a no-deal Brexit… and there’s the quandary!

The Prime Minister’s hope is that no law is passed which blocks a no-deal Brexit and he avoids/wins a no-confidence vote. This would leave him ‘shackle-free’ to negotiate with the EU in the run-up to the Council summit on 17th October. He could then return, a hero(!) with a deal that can be passed in Parliament.

If this is not passed, then everyone gets back on the merry-go-round, with Parliament forcing the Prime Minister to ask for an extension from the EU beyond 31st October, as it did with Theresa May in March.

So what does this mean for the chances of a no-deal Brexit?  Well, given the multiple alternative outcomes outlined above, the likelihood of a no-deal Brexit hasn’t necessarily increased significantly.  The feeling persists that Boris Johnson ultimately wants a deal; dividing Parliament and the Country by actually going through with no deal would only increase the chances that his stay in Number 10 is both one of the shortest in history, and memorable only for all the wrong reasons.

Does “Bojo” have the necessary brinkmanship skills?  We’ll know very shortly.

TwentyFour Asset Management
2020-1-09_24_heavy-supply-meets-heavy-demand_teaser
TwentyFour Blog

Heavy Supply Meets Heavy Demand

Kicking off the new year, we expected the new issue market to be very active and we certainly haven’t been disappointed, with the good momentum created at the end of last year – thanks to the US and China reaching a ‘phase one’ agreement and the resounding victory by the Conservatives paving the way for Brexit negotiations to move forward – allowing pent-up borrowing demand to hit the market.

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