Will Boris Johnson’s victory lead to a no-deal Brexit or is there still time?

The leader of the Conservative party was the big winner of the UK elections held last Thursday. Boris Johnson has not only won but also secured the majority that will allow him to promote his Brexit deal and leave the European Union by next January. Mr Johnson’s campaign promises regarding the end of the transition period seem to be on the immediate plans of the UK Prime Minister who is about to write into law that the UK will make an agreement with the EU by the end of 2020. The latter seems to be leaving no room for further extensions or negotiations even from the side of the Old Continent in order to avoid a no Brexit deal. Boris’ triumph and his Brexit intentions Most of the opinion polls surveying the UK elections’ result were right. The Tories managed to come first leaving the Labour party behind by 11%. Thus, Johnson’s party secured the House of Commons majority with 365 seats which are more than enough to promote his deal. Without delaying, the UK Prime Minister is about to give the bill its first reading on Friday followed by a second reading which will involve a debate as well. And as it was not enough, the Tories’ leader has decided to go one step further formalizing his campaign pledges. Boris Johnson together with his minister’s team are drafting the text that will amend the Brexit agreement so that the implementation period lasts till the end of next year. The latter will not allow for either party to ask for an extention in case a deal is not concluded in the aforementioned period. More specifically, a Downing Street source mentioned on this issue that: “Our manifesto made clear that we will not extend the implementation period and the new withdrawal agreement bill will legally prohibit government agreeing to any extension.” Pound’s dive The pound has risen after the victory of Conservative party but fell more than 1% against the dollar yesterday following the British governments’ statements to block any extention for the transition period after 2020. On the other hand, this led the UK stocks of FTSE 100 to close at positive signs while the main indices of the other EU countries closed lower. Particularly, Maarten Geerdink, head of European equities at NN Investment Partners, told CNBC that: “The latest reports from the U.K. would produce another cliffhanger for Europe. It will be another target that the market can focus on.. But I do think the fact that he (Prime Minister Boris Johnson) has such a huge majority in parliament does give him a lot more room to get the deal done.” Is the EU ready for a Hard-Brexit? The decision of Boris Johnson to exclude any extention for the Brexit deal has caused serious concerns to the EU which should be well-prepared even for the worst-case scenario; a Brexit without a deal. The EU has stated it in the past that more time will be needed in order to finalise the negotiations between the two parties but the UK does not seem to share the same opinion. Furthermore, Sabine Weyand, director general for trade at the European Commission, mentioned at an event at the European Policy Centre that: “Given all the signals … we are well advised to take seriously that the UK does not intend to go for an extension of the transition and we need to be prepared for that. That means in the negotiations we have to look at those issues where failing to reach an agreement by 2020 would lead to another cliff-edge situation.” However, the UK shows its optimism on the conclusion of this pact. Michael Gove explicitly rejected the idea that the U.K. will leave the EU without sealing a new agreement. The UK Cabinet minister also stated that it is certain that the UK will “get this deal done in time”. Despite the fact that the new government holds the majority in the UK Parliament and its intentions to bind the procedure making a deal with the EU by next Christmas, it seems very risky to limit the options when attempting to make a deal with so many aspects at stake. JP Morgan economist Malcolm Barr has put the chance of a no-deal Brexit at 25%, saying that it is “a number we regard as uncomfortably high.” Will Boris Johnson leave the EU without a deal? Will the EU retreat on certain topics to finalise the agreement on time? All in all, it looks as if the UK Prime Minister has decided to exit the bloc once and for all regardless of the consequences. This is needless to say quite irresponsible putting at risk both the EU and UK economies. As the situation has evolved so far, it appears that 11 months are not enough to secure a trade deal the moment that it has taken more than three years since the decision of the UK to leave the EU has taken place. But the UK which has asked several extentions from the EU till now is about to jeopardize its trade agreement with the Old Continent by leaving no alternative but a no-deal Brexit.