Its hard not to be bipolar about Brexit.
Is it going to happen? Isn’t it going to happen?
I’ve said all along that Brexit is a dead duck because the government institutions of the UK absolutely can’t stomach the idea of Brexit. That is totally understandable, even if you don’t agree and when people are naturally aligned it doesn’t take a conspiracy for things to go their way.
However one thing seems sure, no one has a clue how its going to pan out, unless of course the UK Prime Minister had his watertight get out of Europe ‘get out of jail’ card firmly up his sleeve.
As no one is staying what that might be, it seems unlikely. However the whole situation is unlikely and opinions seem firmly anchored in wishful thinking rather than good information.
The British pound that should be a good indicator of the likely outcome is firmly in the 50/50 zone.
Here is the chart and you can see the range of Brexit on and Brexit off and the current position of the Pound Euro exchange rate being firmly in the middle.
You can argue that either Brexit-on or Brexit-off would push the pound further than these bounds, but you can see scope of the playing field and that right now we are roughly betwixt and between.
To me there are only two outcomes, Hard Brexit or Dead Brexit but this doesn’t seem a popular point of view. The future is often seen as elaborate from here, with national governments, byzantine election deals, wild political upsets and the like given as possibilities.
To me its either a ‘Hard Brexit’ or a ‘article 50’ revocation.
Now instead of me punditing along let us see what the betting market has to say about it.
The gambling fraternity say, that there will be an article 50 extension. The odds are a massive 1 to 4 on, which for the uninitiated means an extension is an 80% certainty. Really! To me that’s a ‘dead brexit’ right there but the gamblers just see that as another step on the mired road of Brexit. How the prime minister Boris Johnson could survive an extension is anyone’s guess, but if that meant he was as he suggested ‘dead in a ditch’ after that, its hard to imagine his replacement being able to deliver anything but an article 50 revocation with a promise to revisit. However political survival is a world class skill of these players, so who knows what ditch-life for Boris Johnson might pan out to be.
According to the gamblers the chance of a hard Brexit is only 25%, but more interestingly the backers see the UK leaving on the anointed date of 31st of October with or without a deal as a much higher chance.
That is to say, the gamblers think a Brexit with a deal, hugely more likely than a hard Brexit. This seems totally optimistic to me, but betting odds are meant to be much smarter than mere commentators.
To confuse the issue more, if more is needed, the gambling markets thing that before there is any kind of Brexit there will be an election. That seems sound at least from a political sanity point of view, but will the two main parties risk annihilation at the polls rather than instead indefinitely delaying Brexit and then trying to magic some distraction up to kick the can down the road as far as possible? Will honour and sanity break out. I’d guess long odds on that.
So in a nutshell the gambling markets say:
Brexit delay 80%
then
General election 90%
Then
Brexit between now and the end of next year 75%
That’s great news for pundits because it seems chaos is assured come what may for a long time to come.
Meanwhile I don’t believe a word of it, but it’s a fool that runs too hard against the wisdom of crowds, so Ill shrug and say, ‘it could happen.’