UK: Theresa May’s impossible equation is alive and kicking – Nordea Markets

Analysts at Nordea Markets note suggest that although Theresa May won a “meaningful vote” victory in the House of Commons but May’s struggle in this vote emphasises the big and almost unsolvable issue for Theresa May.

Key Quotes

“She has to manage three stakeholders in the Brexit negotiation:

I) The Brexiteer-ministers (David Davis, Liam Fox and Boris Johnson) - all favouring a hardliner Brexit

II) A majority in the House of Commons (leaning softer than the Brexiteers)

III) Michel Barnier and the European Union

And currently it looks like it will at most be possible to satisfy two out of three stakeholders at a time.”

“The continued domestic mudslinging doesn’t leave Theresa May (and David Davis) in a good negotiation position ahead of the EU summit.”

“In the meanwhile, Bank of England opted for a hawkish hold, keeping the door open for a hike in August. However, we remain firm in our conviction that UK key figures will continue south (both inflation and growth momentum), but downside surprises to the outlook are also needed to prevent the Bank of England from hiking in August.”