The fog on Brexit remains

Stephanie Kelly from Aberdeen Standard Investments describes possible scenarios, which the UK could face in the wake of Brexit. Furthermore, she rates the likelihood of each scenario.

"The path to the UK exiting the EU remains extremely opaque, with no single outcome standing out in our scenario analysis", says Stephanie Kelly, Political Economist at Aberdeen Standard Investments. According to her, this reflects the wide range of possible outcomes, which is also subject to change in this extremely febrile political environment.

Deal from May
The largest probability mass lies with some kind of deal from May (25%) given the key role the government plays in negotiating and passing Brexit legislation, she thinks. However, May's room to manoeuvre in this environment is limited by vastly differing views within her party on her proposed withdrawal agreement and the EU's lack of willing to alter the legal backstop agreement.

Red line for pro-Brexit
A customs union would be the next most likely outcome (20%) because it is the only existing legal arrangement that might garner a majority in parliament given it is Labour party policy, it helps to retain a fluid Irish border and it secures control of immigration. However, as she objects, it would clearly limit the ability of the government to do trade deals globally, a red line for many pro-Brexit MPs.

Uncertainty about a path forward
"The risk of no deal remains substantial (20%) due to the substantial uncertainty about a path forward, the significant opposition to May's deal from within the Conservative Party European Research Group and the fact that it is the legal default position in the absence of a deal", Kelly adds.

General election and referendum
Both a general election and referendum remain possible (15%), as she points out, though the latter has become less popular in recent weeks. Nonetheless, both options would provide MPs a circuit breaker amid policy gridlock. "It is not clear what questions would be on the ballot paper so the scenarios account for the possibility of including or not including No Deal", Kelly says.

Norway Plus least likely
"Finally Norway Plus is a widely discussed option in news media but, in our estimations, in the least likely next step (5%)", closes Kelly. Her explanation for this is that it does not achieve any of the aims of the Brexit campaign (control of immigration, independent trade policy, contributions to the EU) and so it would be very difficult to see Conservative government or even a basic majority agreeing to it.