Eurasia Group | Politics in Pictures: a visual guide to Brexit

Politics in Pictures: a visual guide to Brexit

6 September 2019
A setback for Boris

This week in Westminister Boris Johnson's slim Conservative majority fell apart when the House of Commons approved the “Benn Bill” calling for a three-month extension of the Brexit date to 31 January 2020 if the United Kingdom had neither reached an agreement with the European Union nor secured parliament's approval for a “no-deal” exit.

Boris Johnson's government loses Brexit majority

Twenty-one Conservative MPs (including several former ministers) voted against the government, despite Johnson's insistence that the UK would have a stronger hand at the negotiating table if a no-deal Brexit remained a possibility. However, figures from the IMF suggest that a no-deal Brexit would actually be more damaging for the UK than for the EU.

EU exhibits relatively low exposure to no deal Brexit

UK has more to lose in a no-deal scenario

Even if a deal is struck before Brexit, the terms of that deal and the consequent level of trade access for the UK will have significant implications for the economic relationship between the EU and the UK, with an especially large impact on the UK's services sector.

Potential impact of Brexit on UK-EU trade

Nearly half of all UK exports go to the EU, a number which would surely decrease in a no-deal Brexit world given possible jumps in tariff rates, regulatory divergence, and the imposition of non-tariff barriers.

The UK's export destinations

While other countries would benefit more

However, the UK's and Europe's losses will open doors for other leading economies to profit. The EU and UK will increasingly look elsewhere for imports as costs of imports from each other increases, with the United States, China, and even India looking to benefit the most. Neverthless, most analysts believe that not all the losses to the UK and EU from the disruption of their long-standing close trade relationship will be made up by trade diversion elsewhere.

Annual economic impact of a Hard Brexit

Election is the most likely outcome for now

Boris Johnson's parliamentary setback this week reinforced Eurasia Group's view that the most probable outcome for the UK is a new general election (45% probability), but it is unclear whether this will be held before or after 31 October. We hold the chance of a no-deal Brexit at 30%.

Boris Johnson's Brexit base case

In the event of an election, current polling trends favor the Conservative Party, which has gained at the expense of the Brexit Party in recent months. However, it is not guaranteed that all Conservative members would side with Boris Johnson's no-deal Brexit strategy, suggesting that the UK will continue to muddle through Brexit uncertainty even with a new parliament and government.

Conservatives rally as UK moves toward snap elections

Read British Prime Minister Boris Johnson has suspended the UK's parliament. What happens next?, New UK prime minister to play hardball on Brexit, The quick read about ... the UK after May, and *Brexit in our Top Risks 2019 report to learn more.
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