UK: Article 50 debate continues to rage – MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the aspect that might be helping to stabilise GBP sentiment is the continued debate over the treatment of Article 50 of the Lisbon Treaty.

Key Quotes

“On this there have been reports suggesting that Article 50 might never be triggered. With a majority of MPs in parliament in London pro-Europe and with both Scotland and Northern Ireland having voted to Remain, there is a sense of no rush in triggering Article 50. Scenarios can arise that see any vote on triggering Article 50 being delayed and delayed, perhaps to another general election, perhaps until a time when another referendum takes place. In that sense the leadership election of the Conservative Party is of course important. Victory for Boris Johnson means the man with the most power will certainly want Article 50 triggered before too much delay. But victory for Theresa May might not see the same extent of speed toward an Article 50 vote.

Again, we are dubious and this might be nothing more than a simple strategy on the part of the Leave campaign to allow this impression to fester in order to help stabilise the financial markets and reduce the risk of panic. The first objective must surely be to stabilise the financial markets and we would expect some generally conciliatory comments in Brussels today with the EU Leaders’ Summit the first opportunity for senior politicians to attempt to restore some stability through conveying an impression that positive negotiations are possible. Whether that is true or not, only time will tell but for now that message would be welcomed by the financial markets.”