Brexit Bulletin: Week of Noise

(Bloomberg) -- This week in Brexit: Boris Johnson zigzagged, Jeremy Hunt raised the stakes and Theresa May hinted at rebellion.

What’s Happening?

The first full week of the Conservative leadership contest has had more noise than signal. Here are the key takeaways:

1. Boris Johnson said he would deliver Brexit on Oct. 31 “do or die, come what may.” A day later the top contender to be the next prime minister said the chances of no-deal were “ a million to one against.”
2. Johnson, the favorite to be Britain’s next prime minister, said he would make sure all his Cabinet were ready to pursue a hard split from the European Union.
3. Johnson didn’t rule out suspending Parliament to push through a no-deal exit. But he’s not “attracted” to the idea.
4. Anti-Brexit members of Parliament made a new bid to block a cliff-edge departure. They’re using an amendment that could crimp the government’s ability to spend. Stay tuned for a vote early next week.
5. Both candidates said an election before Brexit would be damaging. Johnson’s rival Jeremy Hunt went further, promising not to hold one. 
6. Outgoing Prime Minister Theresa May dropped a strong hint that she could oppose her successor if he pursues an exit without an agreement, indicating she would join a growing group of backbench rebels trying to stop it.
7. Hunt also said he’d force his ministers to keep no-deal on the table and deplored MPs who voted to block it. He promised to quit if he failed to deliver. Playing catch-up with Johnson, he offered a boost to defense spending and showed a bit more personality than usual.
8. Some 83% of Tory members back a no-agreement departure, according to a poll by YouGov. That breaks down into the 24% who think the new prime minister shouldn’t even try to renegotiate May’s failed pact with the European Union and 59% who say the U.K. should leave in October whether or not talks on a new deal prosper. These are the people choosing the next prime minister.
9.  Johnson and Bank of England Governor Mark Carney sparred over the facts of no-deal.
10. The Labour Party again postponed a decision on whether to back a second referendum.

Today’s Must-Reads

• Johnson is considering an emergency budget in September for a no-deal Brexit that would include tax cuts, changes to the stamp duty and a freeze on regulation, the Times reports.
• The Swiss stock exchange could soon be off-limits to EU traders. Blame it (in part) on Brexit.
• Johnson called the French “turds” in a comment captured by a BBC documentary crew, but the remark was edited out of the broadcast version, the Daily Mail reports.

Brexit in Brief

Barnier Promoted? | EU chief Brexit negotiator Michel Barnier could become president of the European Commission, as he emerges as a compromise candidate to succeed Jean-Claude Juncker.

Fastest-Shrinking Stock Market | The U.K. equity market is shrinking faster than any other major venue globally, according to Citigroup Inc. Depressed valuations and low borrowing costs have encouraged listed U.K. firms to pursue the biggest set of buybacks since 2008, fewer companies have gone public amid the uncertainty, and private equity funds and foreign buyers are chasing British acquisitions.

More Gloom | U.K. consumer confidence took another dip in June as Britons became more pessimistic about their personal financial situation. The headline measure dropped to minus 13, erasing a slight rebound in May, and all five components of the index —encompassing scores for personal finances, general economic optimism and major purchase intentions — dropped from the previous month.

Seeking Answers | Pharmaceutical companies urged the leadership rivals to offer more clarity on their Brexit positions, saying they need to know how to prepare a third time for a no-deal departure. “We should be under no illusions that ensuring U.K. medicine supply in a ‘no deal’ Brexit will be easy or smooth,” said Steve Bates, chief executive of the U.K. Bioindustry Association.

Astra Plant | PSA’s final decision on whether to build the next generation Astra model at Ellesmere Port in the U.K. will depend on Brexit terms and a deal with unions, the French automaker said.

Mars Bars | Johnson promised that a no-deal Brexit would not bring food shortages. “The planes will fly, there will be drinking water whatever happens on Nov. 1 in this country and there will be milk solids and glucose and whey for our Mars Bars,” he said, without giving any details of how he would ensure supplies. “Where there’s a will there’s a way.”

On the Markets | The pound was unchanged early on Friday at $1.2668.

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To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net

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