Goldman Sachs predicts Brexit delay as no-deal risk cut to 10%

Goldman Sachs has slashed the risk of Britain crashing out of the EU without a deal to 10% in its latest forecast.

Analysts at the investment bank now believe Britain is more likely than not to delay Brexit, after UK prime minister Theresa May signalled she would let MPs vote on requesting an extension to Article 50.

But they still believe parliament will eventually sign off the deal struck between May and the EU, despite the agreement being voted down by MPs in January in a crushing defeat for the government.

Goldman Sachs analysts said in a note the chances of a no-deal Brexit were now 10%, down from 15%, while they raised the probability of an extension to Article 50 from 50% to 55%.

It comes after the government agreed to MPs’ demands for a potential fresh vote in the Commons on asking the EU to delay Britain’s 29 March deadline for exit from the bloc.

READ MORE: Sterling surge as markets react to possible Brexit delay

Prime minister Theresa May. Photo: Hannah McKay/PA Archive/PA Images

MPs have been told they will be able to vote on May’s deal, which she hopes to renegotiate with Brussels over the next fortnight, by 12 March.

If May’s deal is knocked down again by the Commons, MPs will have the chance to vote on leaving without a deal on 13 March. If that also fails to pass, a vote on a potential delay will be held the following day.

Sterling reached its highest level against the euro since May 2017 and against the dollar since mid-2019 yesterday as investors began to bet on a Brexit delay or increased chances of Britain not leaving at all.

The new timetable marks a significant concession from the government, as the prime minister has repeatedly insisted Britain would leave on 29 March with or without a deal.

Labour leader Jeremy Corbyn has also shifted his position significantly this week, moving far closer towards supporting a second referendum on Brexit.

But EU leaders and officials have suggested an extension to Article 50 is not guaranteed, and may only be granted if there is evidence the UK’s position has changed in negotiations over the terms of the divorce.