Chances of Brexit trade deal narrow for banks and bookmakers | Money


Flags of the Union Jack and European Union are seen ahead of the meeting of European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson, in Brussels, Belgium December 9, 2020. — Reuters pic

LONDON, Dec 10 — Investment banks cut the chances of Britain and the European Union agreeing a post-Brexit trade deal today while bookmakers slashed the odds to 50 per cent after leaders failed to break an impasse in talks.

British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen met yesterday to try to break the deadlock, but said significant gaps remained and set a Sunday deadline to decide on their next steps.

JPMorgan reduced the chances of a trade deal to 60 per cent from 66 per cent and said the probability could fall below 50 per cent if progress is not made soon. Citi warned that the chances of a deal have fallen materially, although it still thinks one is more likely.

JPMorgan analyst Malcolm Barr said deadlines have come and gone before and negotiations could continue beyond Sunday.

“But the need to make preparations for the regime shift of ‘no deal’ is pressing, and taking such actions alongside the talks increases the sense that the two sides would be ‘going through the motions’ rather than being committed to concluding a deal,” Barr said in a note to clients.

“In the absence of significant progress toward an agreement by the end of the weekend, the odds of a deal will fall below 50 per cent,” JPMorgan’s Barr added.

Rabobank cut the chances of a deal to 60 per cent from 70 per cent.

An underlying confidence among banks that, on balance, Brussels and London will reach a deal on trading relations from next year contrasts with a much more cautious betting market.

Paddy Power and Betfair are offering odds with a 50 per cent probability of a no-deal, a jump from a 33 per cent yesterday.

The odds of no-deal have also risen to 58 per cent on betting exchange Smarkets, up sharply from the 19 per cent priced in last week. — Reuters



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