Market watchers will be keeping a careful eye on the government’s level of no-deal contingency planning in the weeks ahead.
Negotiation 101 says you will never get the best deal unless you are prepared to walk away. But is also says that if you decide to call the other party’s bluff then you had better be prepared to carry it through.
Right now, it’s unclear if both of these circumstances are entirely true. And even if they are true, there is an increasing army of remain motivated MPs plotting to take no-deal off the table. With the economy slowing, and dire warnings of no-deal consequences being thrown around like confetti, some kind of event (like an election or a 2nd referendum) seems an increasingly likely outcome.
In a new report to investors, Moody’s warns that crashing out of the EU would cause “significant” damage to Britain’s credit rating, and that of major UK companies. In turn a falling credit rating will be reflected in a weaker pound, which in our world will drive up the cost of imported food, even before any additional tariffs imposed it.
With the announcement that Michael Gove will head up plans for a no-deal Brexit, contingency plans from March 31st will no doubt be coming back down off the shelf, and we will report any movements (or lack of them) that we observe.