After nearly 600 days of waiting, news of a draft Brexit treaty hit the wire; yet markets showed their disillusionment as sterling bounced less than a penny and then weakened again below yesterday’s close, and at time of writing hovers below 1.2950 against the dollar. The scant enthusiasm reflects the scant political endorsement of the deal – with antagonizing of the draft deal from both Brexiteers and Remainers even before they had a chance to evaluate the 400-500 page outline. Boris Johnson stated he would vote against this “vassal state stuff” that would leave Britain following unreasonable EU rules. While Jeffrey Donaldson of the DUP stated in a radio interview that “this deal has the potential to lead to the break-up of the United Kingdom and that is not something we can support".
Since yesterday afternoon, Ministers have been briefed individually on the terms by Theresa May, and this morning have had their first look at the deal in a special reading room with May’s showdown with the Cabinet scheduled for 2pm. If May can pull it out the bag with the Cabinet, then the EU Commission should publish the details later today with plans to hold an emergency summit on the 25th November for the 27 other EU member states to sign-off. Only then may we have the misfortune of watching Prime Minister Theresa May, Chief Whip Julian Smith et al. attempt to beg and barter enough backing to avoid a no-deal Brexit. (Those that know the original House of Cards may by then be pining for a more Francis Urquhart type PM/Whip to push through the deal).
As it stands, key points of the agreement include the contentious Northern Ireland “backstop” to avoid reintroducing physical checks on the border, a £39bn “divorce bill” settlement by the UK, commitments on post-Brexit citizens' rights, and a 21-month transition period to smooth the chaos on both sides as the UK leaves the EU on the 29th March 2019. And although, as the cabinet meet for the next 3 hours, the expectation is for them to stomach the bitter compromises of the deal: a block now would be much better than a full on collapse of the deal in Parliament if the Eurosceptics are not convinced that what is on the table is the best acceptable offer. As the New Statesman sees it, “There are not enough Labour rebels to cancel out the Tory Brexiteers, pro-EU Tories wanting another referendum and the DUP.” So if all goes to plan today and on the 25th November with the EU vote, the Prime Minister will still have a lot of work and Christmas wishing if there’s to be any chance of a happy and prosperous 2019. Meanwhile, in less noticeable news The European Commission also published a Contingency Action Plan which although has some positive points such as “risks in this [EU financial] sector linked to a no deal scenario have diminished significantly” it is a poignant snapshot reminder of what of a No-Deal might look like.
Also on a slightly more positive tone: 46 years ago today, on 14th November 1972, the Dow Jones Industrial Average closed above 1,000 for the first time. Just earlier this week it peaked above 26,000 for the third time this year; however including reinvesting dividends over the 46 years would have turned that $1,000 into $117,247 with an annualised return of 10.9%.