UK: Extension granted to 31 October – Danske Bank

Analysts at Danske Bank note that overnight, EU leaders decided to grant the UK a "medium" extension to 31 October (including taking stock in June).

Key Quotes

“While a majority of the EU leaders wanted a long extension of 9-12 months, French President Macron played hard ball and argued for a much shorter extension. The extension is conditioned on no reopening of the withdrawal agreement, participating in European elections and "sincere cooperation". The UK government has accepted the offer, meaning that the new Brexit day is 31 October and the agreement does not need approval in the House of Commons (EU law is above British law).”

“Today, we will monitor the British politicians ' reaction. While the Conservative party rules say there cannot be another no confidence vote in May's party leadership until December, the leaders of the Conservative backbenchers (the so-called 1922 committee) decided yesterday they will try to persuade May to quit soon.”

“It is difficult to predict what is going to happen but as it seems unlikely that the House of Commons will back Theresa May's deal and a breakthrough in the cross-party talks does not seem imminent, it may end up being the case EU leaders will have to decide once again in October. After the EU summit Merkel sounded open to the possibility of a further extension.”