The odds are still in favour of a post-Brexit agreement between Britain and the European Union, with betting markets placing a 69% chance of a deal on Tuesday morning.
Smarkets betting exchange, is still predicting a chance of a deal as the clock ticks down on the end of the transition period deadline on 31 December.
Odds have been fluctuating and dropped in recent days after the UK and EU extended several deadlines to reach a deal. But, despite that, odds have improved by 24 points this morning alone.
Brexit deal talks took a backseat on Tuesday due to ongoing negotiations between the UK and French governments to re-open the borders, amid continued lorry tailbacks and fears of disruption to food and medicine supplies from France’s blockade.
It comes as, on Sunday and Monday several countries across the globe closed their borders on UK travellers and imposed stricter quarantine measures after a new, fast-spreading variant of the COVID-19 virus was found in Britain.
Britain’s economy faces a tough start to 2021, not just with Brexit but also due to the coronavirus pandemic which lead to unprecedented declines in gross domestic product (GDP) and a recession in the second quarter of 2020.
"Besides Brexit, Boris Johnson is also facing a huge surge in coronavirus infections domestically, with countries in Europe and across the world closing their borders to the UK in response - a potential precursor to the chaos that could await in the event of a no-deal Brexit in January," Smarkets political nalyst, Patrick Flynn, said.
Meanwhile, while some Conservative MPs and SNP leader Nicola Sturgeon urged prime minister Boris Johnson to extend the Brexit transition period to avoid no-deal, the chance of that happening is just 1 in 5.
Flynn added: "Regardless of whether a trade deal were to be agreed by both sides, MEPs would not have enough time to approve it, so it is unclear whether EU negotiators will want to agree to a deal before the end of the year - even if only a provisional one - without explicit support from the European Parliament.
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EU’s chief Brexit negotiator is due to make a speech on Tuesday afternoon. It comes as the EU reportedly rebuffed Britain’s latest proposals to break the Brexit deadlock.
Britain is still in negotiations with the EU over a number of key points, with the most contentious issues for both sides including fisheries, ensuring fair competition guarantees and ways to solve future disputes. Neither side has been ready to concede on these sticking points.
The UK has just 10 days to strike a trade deal with the bloc or faces falling out of the Brexit transition period on to World Trade Organisation (WTO) terms on 31 December.
UK’s official budget watchdog, the Office for Budget Responsibility (OBR) has said this would knock 2% off the size of the economy, given the added costs and slower speed of trade with the continent.
A spokesperson for Johnson said on Monday that the government would not seek to extend the transition period despite ongoing disruption caused by the pandemic. Home secretary Priti Patel reiterated this stance on Sky News on Tuesday morning.
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