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Goldman Sachs ups ‘no-deal’ likelihood after UK parliament amendment vote

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LONDON (Reuters) – Goldman Sachs (NYSE:GS) nudged up its estimated probability of a “no-deal” Brexit on Wednesday after British lawmakers instructed Prime Minister Theresa May to reopen a Brexit treaty with the European Union to replace a controversial Irish border arrangement.

Britain’s parliament rejected a proposal to give parliament a path to prevent a potentially chaotic “no-deal” exit, but accepted two amendments – one seeking to replace the Irish backstop with alternative arrangements, and another rejecting the notion of a “no-deal” Brexit.

Goldman Sachs analysts upped their “no-deal” Brexit probability to 15 percent from 10 percent, and cut their probability of Brexit not happening at all to 35 percent from 40 percent.

They held their estimated probability of a delayed Brexit deal at 50 percent.

“Parliament at large signaled last night that it opposes a ‘no deal’ Brexit, but it is not ready to delay Brexit to rule out ‘no deal’ entirely,” wrote Goldman Sachs analysts.

“But by offering something to everyone, Tuesday’s Brexit amendments offered little additional clarity to anyone,” they added.

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