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Economy | Europe

A EU – UK Brexit Deal Agreed But It's Not Quite Over Yet

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-->A EU - UK Brexit Deal Agreed But Its Not Quite Over Yet      

  • The EU – UK reach a new deal that is supposed to ensure Britain leaves the EU in an orderly way and removes the Irish backstop. But an equally difficult hurdle remains – the UK parliament voting on the deal on October 19th.

 

What’s new?

  • Northern Ireland (NI) remains in the UK's customs territory, but all EU rules to apply to goods arriving in NI. This may mean no customs checks on the entire island of Ireland, instead in ports on mainland UK.
  • For goods crossing from UK to Northern Ireland that are deemed to be staying there, EU tariffs may not apply. And as long as the goods do not cross to Ireland and the EU's single market, only UK customs tariffs apply.
  • The NI assembly (Parliament) has to give consent for the region's continued alignment with the EU regulatory regime every four years. There may be no executive veto option by the Democratic Unionist Party (DUP), as originally envisaged. Instead, it may require a simple majority agreement. 

 

What’s next? UK Parliament Vote – A difficult hurdle but not impossible             

  • The UK parliament votes on PM Johnson’s deal this Saturday (October 19th).
  • For the new Brexit deal to pass the UK parliament, PM Boris Johnson needs 320 votes in favor.
  • Currently, the Conservative Party holds 287 seats and it is assumed all members within the party (including the hard Brexiteers called the European Research group) will vote for the deal.
  • The DUP with 10 members (a traditional ally of the hard Brexiteers and Tories coalition partner) who was earlier thought to be in favour of the deal, has now indicated it may not support the deal as it has no executive veto option on remaining in the EU regulatory regime under the new deal. The Labor Party/ LibDems and SNP have also indicated they may not vote for the deal (308 members in total).
  • This means Boris Johnson needs the vote of Independents (currently 36 members including 21 ex-Conservatives sacked earlier by PM Johnson but who have now been given a pathway to re-join the Conservatives if they back the Brexit deal), possibly the Greens (1 member) and Plaid Cymru (4 members).           

 

UK Parliament Vote

Scenario 1:

If the Brexit deal is passed this Saturday, then the UK withdraws from the EU in an orderly way.

 

Scenario 2:

If the Brexit deal fails to pass in its original form then could be 2 options –

  • Deal is still passed but with a conditional confirmatory referendum vote required, that is, a deal is passed subject to it being put back to a UK referendum vote. 
  • An unconditional rejection of the deal on the other hand (the least likely option) is likely to play into the “No Deal” scenario. This may see a fall in confidence in UK assets.  

 

 

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MARKET SPECIFIC DISCLOSURES

Market Specific Disclosures

Hong Kong: This communication is distributed in Hong Kong by Citibank (Hong Kong) Limited ("CHKL") and/or Citibank, N.A., Hong Kong Branch (“CBNA HK”, Citibank, N.A. is organized under the laws of U.S.A. with limited liability). CHKL and CBNA HK provide no independent research or analysis in the substance or preparation of this communication. Although information in this communication has been obtained from sources believed to be reliable, CHKL and CBNA HK do not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from its use.

This communication is for general information only, is not intended as a recommendation or an offer or solicitation for the purchase or sale of any products or services and should not be relied upon as financial advice. The information herein
has not taken account of the objectives, financial situation or needs of any particular investor. Any person considering an investment should consider the suitability of the investment having regard to their objectives, financial situation and needs,
and should seek independent advice before making an investment decision. You should obtain and consider the relevant product terms and conditions and risk disclosure statement, and consider if it’s suitable for your objectives, financial situation or needs before making any investment decision. Investors are advised to obtain independent legal, financial and taxation advice prior to investing. Investments are not deposits, are not protected by the Deposit Protection Scheme in Hong Kong
and are subject to investment risk including the possible loss of the principal amount invested.

This communication does not constitute the distribution of any information in any jurisdiction in which it is unlawful to distribute such information to any person in such jurisdiction.

CHKL does not provide discretionary portfolio management services.

Singapore: This communication is distributed in Singapore by Citibank Singapore Limited (“CSL”) to selected Citigold/Citigold Private Clients. CSL provides no independent research or analysis of the substance or in preparation of this communication. Please contact your Citigold/Citigold Private Client Relationship Manager in CSL if you have any queries on or any matters arising from or in connection with this communication. Investment products are not insured under
the provisions of the Deposit Insurance and Policy Owners’ Protection Schemes Act of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme.

This communication is for general information only and should not be relied upon as financial advice. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person and is not intended to be an exhaustive discussion of the strategies or concepts mentioned herein or tax or legal advice. Any person interested in the strategies or concepts mentioned herein should consult their independent tax, legal, financial or other advisors,
as appropriate. This communication does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom
it is unlawful to distribute such information or make any offer or solicitation.

Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making
an investment decision. Interested investors should seek the advice of their financial adviser about the issues discussed herein as appropriate. Should investors choose not to seek such advice, they should carefully consider the risks associated
with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives and assess whether the investment product is suitable for
themselves. Although information in this document has been obtained from sources believed to be reliable, CSL does not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from Its use.

CSL does not provide discretionary portfolio management services.

UAE: This document is distributed in UAE by Citibank, N.A. UAE. Citibank N.A. UAE is licensed by UAE Securities and Commodities Authority (“SCA”) to undertake the financial activity as Promoter under license number 602003.

Citibank N.A. UAE is registered with Central Bank of UAE under license numbers BSD/504/83 for Al Wasl Branch Dubai, 13/184/2019 for Mall of the Emirates Branch Dubai, BSD/2819/9 for Sharjah Branch, and BSD/692/83 for Abu Dhabi Branch.

This is not an official statement of Citigroup Inc. and may not reflect all of your investments with or made through Citibank. For an accurate record of your accounts and transactions, please consult your official statement. Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making an investment decision. Each investor should carefully consider the risks associated with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives.
At any time, Citigroup companies may compensate affiliates and their representatives for providing products and services to clients.

United Kingdom: This document is distributed in the U.K. by Citibank UK Limited and in Jersey by Citibank N.A., Jersey Branch.

Citibank UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our firm’s Financial Services Register number is 805574. Citibank UK Limited
is a company limited by shares registered in England and Wales with registered address at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, Companies House Registration No. 11283101.

Citibank N.A., Jersey Branch is regulated by the Jersey Financial Services Commission. Citi International Personal Bank is registered in Jersey as a business name of Citibank N.A. The address of Citibank N.A., Jersey Branch is P.O. Box 104, 38 Esplanade, St Helier, Jersey JE4 8QB. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA.

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