UK Contemplating Brexit With no Backup Plan

The U.K. now looks to be seriously contemplating the idea that it could leave the EU without a fully-formed trade agreement with the rest of the bloc.

Reports early Monday from The Telegraph newspaper said that U.K. leader Theresa May will appoint a “cabinet minister for no deal Brexit” this week. This is seen an attempt by the prime minister to demonstrate to the EU that the country is serious about leaving even if it fails to reach a trade deal. Such a minister would work alongside Brexit Secretary David Davis and deliver constant updates on preparations for the eventuality of a no trade deal scenario.

Joan Hoey, regional director of Europe at the Economist Intelligence Unit, told CNBC via email there is “some logic” to such appointment. “No deal is not the government’s objective, but it is the fall-back position in the event of an unsatisfactory deal. If the government is serious about walking away if the EU fails to offer an acceptable deal, it needs to prepare seriously for such an eventuality, and that requires a senior minister within the department for exiting the EU,” she said.

The U.K.’s Department for Exit of the European Union did not confirm the specific appointment of a minister for a no deal scenario when contacted by CNBC. A spokesperson said that the new appointments will be handled by the prime minister “in the usual way.”

This comes as May is set to give a broader reshuffle of her cabinet this week. So far on Monday, Brandon Lewis has replaced Patrick McLoughlin as Conservative Party chairman. Northern Ireland Secretary James Brokenshire has resigned for health reasons. More announcements are due to follow Monday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza