The clock is ticking yet both the UK's immediate and long-term future relationship with the EU remains extremely uncertain. Paul Krishnamurty tries to navigate the process and endgame...
"A 2019 election has been backed down to just [2.5]. For my money, that is a terrible price...So long as Jeremy Corbyn is Labour leader, they won't give him a chance to win power."
Lay 2019 General Election @ 2.5
Withdrawal agreement will be signed this weekend
If nothing else, the last two torturous years should have been an educational experience with regards how politics within the EU and between member states works. One lesson for citizens of all countries should be to take anything their politicians or media say with a huge pinch of salt, for they are evidently more concerned with domestic audiences than reality.
In the final days leading up to this weekend's critical EU summit - where the UK's Withdrawal Agreement is expected to be signed - fantasy and opportunism has been rife. Several Conservative MPs - doubtless with an eye on the leadership - sought to change the agreement, despite absolutely everyone with any knowledge of the EU process dismissing the idea as impossible.
Then - doubtless with an eye on their domestic voters, who are likelier than usual to be paying attention to Brexit - the French and Spanish governments raised their own complaints, with the latter even threatening to 'veto Brexit', despite no such single country veto existing.
After my conversation with Theresa May, our positions remain far away. My Government will always defend the interests of Spain. If there are no changes, we will veto Brexit.? Pedro Sánchez (@sanchezcastejon) November 22, 2018
Were Gibraltar to become an intractable problem, it is possible that all the EU27 could unite as they did over the Irish border, but that would happen later over the secondary, wider trade deal. For now, any problems will be managed with vague, ultimately meaningless, wording in the political declaration. Theresa May will return home with an agreement.
May's deal looks doomed to fail in parliament
The PM's problem, of course, is that hardly anyone at home is happy with it. Even Brexiteers Dominic Raab, Boris Johnson and John Redwood admit this deal is worse than remaining in the EU. Assuming a vote is forthcoming this year, Labour and the DUP will vote it down, placing May's position into further peril.
At this stage, it seems that May has yet again survived. After Raab resigned last week, the odds about her leaving post this year shortened to just [1.57], in expectation of 48 backbenchers writing to demand a confidence vote. However as those letters surprisingly failed to materialise, money poured in the other direction. She's now rated just 21% likely to go in 2018 at odds of [4.8].
Moreover a No Confidence Vote in 2018 is now rated less than 50% likely at [2.06], compared to nearly 70% a few days ago. With no obvious alternative leader or strategy in place, few believe she would lose it and, if surviving, that would secure her leadership for another year.
Having previously backed [6.6] about Oct-Dec and [8.0] about the first three months of 2019, I've cashed both out for a profit because there simply isn't enough time, let alone indication, that May's demise is imminent.
That said, I do expect more resignations are imminent and perhaps another move against her after losing that big vote in parliament. No UK Prime Minister will ever have been in a weaker, humiliating position and, in normal times, one would expect a resignation.
Don't back an early election
Labour have been quite clear what they will do in these circumstances - try to force an election. Although the Fixed Terms Parliaments Act means the next official poll is in 2022, 2019 has been backed down to just [2.5]. For my money, that is a terrible price.
The opposition can try to bring the government down via a confidence vote but they will only have the numbers if some Tories support it. So long as Jeremy Corbyn is Labour leader, they won't give him a chance to win power. I'm not at all convinced the Lib Dems would either. In any case, any Tory leader would recognise that a snap election, whilst they are hopelessly divided and lacking a clear strategy, would be a disaster.
How May's deal could eventually prevail
Next, assuming a vote is lost, a period of extreme uncertainty as the clock ticks down. It is widely rumoured that the government expect turbulence on financial markets, which could bring recalcitrant MPs around. I'm sceptical this will happen. The pound is already extremely low, with this period of uncertainty factored in.
Alternatively, the government could delay the vote, thus increasing the sense of urgency. For all the cross-party sentiment that no deal will be blocked, it grows likelier with every day and the UK government are not in control of the situation.
It is plausible that Labour come around, fearing they will be blamed for the imminent chaos. My doubt here is that the deal as it stands simply doesn't accommodate Labour views, in the way that a Norway-style arrangement might, and it is too late to change that.
A last-minute capitulation from opponents of the deal is nevertheless possible and fairly likely. In this scenario, all hell could break loose within the Conservative Party, pre-empting a split.
A50 extension and second referendum worth a punt
Here's my prediction. May's vote will lose in early December, prompting a cross-party move to try and prevent a no deal Brexit. Everything is now on the table and slowly, politicians will become freer to speak their mind. Extending Article 50 is officially anathema to the government but it may be the only way to avert disaster.
To be clear, the UK cannot unilaterally extend the A50 process and the EU may refuse. I highly doubt they would extend if it were merely for further negotiation or an election, after which all would remain unclear. However the EU has indicated that they would extend if it were to enable a second referendum.
By this stage, the fact both parties have rigidly talked of 'respecting the referendum' will be old news. A crisis demands a response. I believe there will be enough MPs across all sides to secure it. An In/Out referendum before 2020 has come into [2.6] since I tipped it last week and still appeals.
More speculatively, the Brexit Date market barely seems to factor in the possibility of extending Article 50. It would be impossible to organise a referendum before March, so the the autumn would be most likely, say after a six month extension. July-Dec 2019 - which probably equates to Leave winning a second referendum - looks well overpriced at [19.0].
Bet on UK politics here