Theresa May proposed no new approach nor measures in an answer to Parliament's rejection of her Withdrawal Bill last week that was billed as Plan B, but in fact looked like a lightly tweaked Plan A. After a signal that a period of consultation that filled her diary with a busy timetable of meetings across party lines is over, the chair of Parliament’s Brexit committee, Labour’s Hilary Benn, noted that whilst “her door may have been open, her mind has remained closed”. A pledge to be “more flexible” over the matter of the ‘backstop’ mechanism proposed for Northern Ireland is thereby being met coolly. After all, Theresa May continues to rule-out a ‘no-deal’ form of Brexit whilst indicating that, in her view, the EU is unlikely to agree to extend the Article 50 ‘negotiating period’ that determines when Britain’s EU exit becomes official. Unsurprisingly, the only acknowledgement given during the Prime Minister’s appearance in the House of Commons to the notion of a further referendum was to note that in her view it would strengthen any moves towards a UK break up whilst damaging respect for democracy. Also as expected, the Prime Minister envisaged a new round of talks with the EU ahead, though Brussels has made it clear it won’t renegotiate the deal, even if the bloc’s leaders are prepared to provide quasi-legal reassurances that transitional measures, like the solution for Northern Ireland, will only ever be temporary. Still, a recent decline in actual and ‘implied’ sterling volatility together with relative cross-asset calm in narrow ranges whilst May delivered ‘Plan B’ point to a market that had already made up its mind before she started. With the government’s ‘alternative approach’ in hand, the focus remains very much on the 29th January when Parliament is set to vote on the Withdrawal Bill again.
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