U.S. investment bank JPMorgan raised its probability of a no-deal Brexit to 25% from 15%, saying its base case is that Boris Johnson becomes prime minister, followed by a general election and then another delay to Britain’s exit to the end of the year.
JPMorgan raised the probability of an Article 50 extension to 60% versus 50% before and cut the probability of exit on the terms of Prime Minister Theresa May’s Withdrawal Agreement to 15% from 35%.
The bank’s Malcolm Barr said in a research note to clients on Tuesday that their base case was that: “Boris Johnson becomes PM in early September on a ‘no deal if we have to’ platform. The EU refuses his central objective of removing the backstop from the Withdrawal agreement.”
“The Commons begins the process of legislating to force Johnson to seek an Article 50 extension, and Johnson calls a general election seeking a mandate for his approach,” the note added.
“The UK and EU agree to extend Article 50 to end December to allow time for the general election to take place and for discussions to follow it.”