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Odds of Brexit trade '50-50' after row over Internal Markets Bill

Kalila Sangster
·2-min read
Britain's Prime Minister Boris Johnson leaves 10 Downing Street in central London on September 9, 2020, to attend Prime Minister's Questions (PMQs) at the House of Commons. - Britain readied on Wednesday to intentionally breach its EU divorce treaty with new legislation that critics warned would undermine its global standing and any hopes for an orderly exit out of the world's biggest single market. Johnson's government was to submit a new bill governing the UK's own internal market across its devolved nations, to take effect after the expiry of a transition period out of European Union membership in December. (Photo by Ben STANSALL / AFP) (Photo by BEN STANSALL/AFP via Getty Images)
UK prime minister Boris Johnson as Britain intentionally breaches its EU divorce treaty with new legislation that undermines key commitments on Northern Ireland. Photo: Ben Stansall/AFP via Getty

Betting exchange Smarkets says the odds of a UK-EU trade deal by the end of this year have declined by 18%, lengthening to near 50-50.

The odds of a deal have now fallen to 49%, Smarkets said, down from 67% a month ago.

Smarkets puts the lengthening odds down to the introduction of the UK government’s Internal Market Bill on Wednesday (9 September). The new bill has attracted controversy as it overrides the UK’s international treaty obligations. The bill states the UK does not have to comply with the Northern Ireland protocol, a key part of the EU Withdrawal Agreement signed last year.

READ MORE: Pound hits six-week low as UK unveils controversial Brexit bill

The protocol gave Northern Ireland the same trading rules and standards as the EU in order to prevent customs checks and a hard border with the Republic of Ireland. Reneging on this commitment has provoked anger in both Ireland and the EU.

Smarkets head of political markets Sarbjit Bakhshi said the Internal Markets Bill was a “gamble” and “clearly the UK government’s last-ditch response to the lack of progress in EU talks.”

Smarkets’ lengthening odds tally with predictions of other observers. Jordan Rochester, a currency strategist at Nomura, this week said the odds of a no deal Brexit had risen to 40%.

Experts said the Internal Markets Bill could also scupper Britain’s chances of striking a quick trade deal with the US.

Congresswoman Nancy Pelosi on Wednesday said reneging on the Northern Ireland Protocol had implications for the the Good Friday Agreement and would give the UK “absolutely no chance” of signing a US trade deal.

“The UK must respect the Northern Ireland Protocol as signed with the EU to ensure the free flow of goods across the border,” she said.

Smarkets said the chance of a UK-US trade deal being struck this year were now just 14%.

“With the UK's intentions seemingly breaking international law, and potentially undermining the Good Friday Agreement, the government is jeopardising a trade deal with the USA and the EU at the same time,” Bakhshi said.

Adrian Paul, an economist with Goldman Sachs, on Thursday said the Internal Markets Bill had “significant implications for the integrity of the EU’s Single Market, the integrity of the United Kingdom, the degree of trust between the UK and the EU, and the likelihood of a UK-US trade deal”.