Coronavirus: Political betting suggests 63% chance that Brexit transition period will not be extended

UK leaving the European Union. Photo: Getty
Odds are in favour of a no-deal Brexit despite coronavirus pandemic, according to betting firm Smarkets. (Getty)

Betting exchange Smarkets says there is a 63% chance that Britain’s Brexit transition period will not be extended beyond the end of the year.

The group said this is a substantial leap in probability from just 15% last week due to the recent statements made by the UK government on exit from the European Union (EU).

The transition period for Britain leaving the EU is due to end on 31 December. During this period, Britain was set to negotiate trade agreements with the 27-nation bloc as well as a number of other measures. However, if no agreement has been made by this time, there will be a gulf of rules and tariffs between the parties.

Over the last few days, Whitehall said it will not accept any delay to the Brexit transition period beyond this year even if the EU offers an extension.

“We will not ask to extend the transition. And, if the EU asks, we will say no. Extending the transition would simply prolong the negotiations, prolong business uncertainty, and delay the moment of control of our borders,” said a spokesperson.

Read more: IMF: UK should seek longer Brexit transition due to coronavirus pandemic

Smarkets says that for this reason, it is likely we’re heading for a no-deal Brexit, since there is a 94% chance that a trade agreement won't be struck this year.

“What normal eventually looks like will also be affected by what seems increasingly possible on Smarkets: that the UK will have a no-deal Brexit at the end of 2020,” said Sarbjit Bakhshi, head of political markets at Smarkets.

“Until mid-April, our users put an extension to the transition period as more likely, but recent statements by Number 10 have flipped the market and now no extension is more probable at 63%. Meanwhile, our market shows a 94% chance that a trade deal will not be struck between the UK and EU this year. If a no-deal Brexit follows hot on the heels of the coronavirus crisis, normality might be a long way off indeed.”

Graphic: Smarkets
Graphic: Smarkets

The coronavirus pandemic has significantly changed everything as leaders across the globe battle to contain COVID-19 as well as help mitigate the damage to the economy.

The International Monetary Fund (IMF) said the global pandemic is likely to cause the worst recession since the Great Depression of the 1930s and do lasting damage to the global economy.

Britain is currently in its fifth week of lockdown, which is having a dramatic effect on businesses, jobs, and the economy. Latest figures show another 759 people have died from coronavirus in UK hospitals, bringing the total number of deaths to 18,100.

Read more: UK economy suffers record shock and 'unprecedented' job losses

On Thursday, data provider IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) released the latest flash figures from their monthly UK purchasing managers’ index (PMI) survey. It showed that the UK economy has suffered its worst month in decades as the coronavirus crisis has wreaked havoc for millions of firms.

Last week, the head of the IMF urged Britain to ask for an extension to its post-Brexit transition period due to the unprecedented impact the coronavirus pandemic is having on the economy.

Kristalina Georgieva, told BBC radio that "it is tough as it is. Let's not make it any tougher. My advice would be to seek ways in which this element of uncertainty is reduced in the interests of everybody, of the UK, of the EU, the whole world.”

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