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JP Morgan still confident in the Brexit deal: raises the probability to 70%

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JP MorganUnlike the market, he has no doubts and believes now more than ever that there is a good chance that the United Kingdom and the European Union will reach a agreement last minute that allows to lay the foundations of a trade without tariffs once the Brexit. Such is the confidence of the US bank that it has increased the probability that it grants an agreement until 70%, from the 60% it previously held.

"Our feeling is that the probability of a deal has gone up from the 60-40 we had earlier in the week, and now we mark that at 70-30"JP Morgan analyst Malcolm Barr said in a note to clients this Friday. In addition, he adds that in his opinion," solutions can be designed to all the problems "that are being put on the table, and that until now they have prevented agreement, "even if the process to reach them is difficult."

The US bank has spoken like this despite the latest clash between Brussels and London. The EU Chief Negotiator, Michel Barnier, he has issued an ultimatum to the British Prime Minister, Boris johnson, to which he has warned that "there is little time left, only a few hours, to work in these negotiations in a useful way if we want the agreement to enter into force on January 1".

He said it in an appearance in the European Parliament, which he took the opportunity to send a message to the United Kingdom: access to the EU single market will be conditional on keeping British fishing waters open to bloc vessels. The negotiations have reached "the moment of truth", and although "there is a possibility of reaching an agreement", it cannot be forgotten that "the path towards such an agreement is very narrow," the Frenchman remarked.

Johnson, for his part, said London was still open to negotiation. "Our door is open, we will continue talking"But he expects a gesture from the EU, although he chilled the possibility of an agreement by saying that the trade discussions "seem difficult."

HOW CAN THE AGREEMENT BE STARTED BY JANUARY 1?

According to many experts, it will be difficult to implement the agreement before January 1 if an agreement is not reached this weekend. At JP Morgan they see it this way. As Barr puts it, "In the UK this is relatively straightforward: Parliament would have to be reconvened and the necessary laws passed by both Houses. The last part of the process can be completed in a matter of hours in extremis."

"On the EU side, it appears that the Council could agree to the provisional implementation of an agreement on January 1 without a vote in the EU Parliament. The 'seems' arises from the fact that the law of the The EU is open to interpretation on the subject, and in such circumstances political will usually dominates, "recalls the JP Morgan expert. However, he notes, "the Council would prefer that the European Parliament have the opportunity to vote to ratify the agreement before it enters into force."

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