Note: since this article went to press, the prime minister has won the confidence vote by 200 to 117.
Theresa May’s political woes are grabbing headlines, but leave us no wiser as to which type of Brexit we’ll get, says John Stepek. So what would a no-deal Brexit mean for your money?
We were promised a big Brexit vote this week, and that’s what we got – just not the one we were expecting (see below). Yet whether or not Theresa May is still prime minister by the time you read this, it doesn’t make a huge difference to the three main potential Brexit outcomes facing Britain: we could get a massaged version of May’s deal; we might face a second referendum or a general election, both of which would probably mean delaying the 29 March deadline for Brexit; or we face some sort of “no-deal” Brexit.
The question for investors is this: what do these outcomes mean for your money, and what is already priced into markets? We know May’s deal would be a relief for markets for now – it maintains the status quo for the foreseeable future. The second option – yet more voting – would be a mixed bag.
Markets might like the idea that Brexit could be reversed, but they’d also fear the prospect of a Jeremy Corbyn government. However, when we’re wondering what’s priced in, it’s mainly the third option – “no-deal” Brexit – that we have to look at. What happens if no feasible alternative deal is put on the table and we still leave the European Union as planned on 29 March 2019?