What is the market telling us about the prospects of a “no-deal” Brexit? On Tuesday, a parliamentary proposal to “delay Brexit rather than leave without a deal” was, as the Bloomberg wire put it, “comfortably beaten.” That and other actions in Parliament, Bloomberg reckons, mean that the “chances of a ‘no-deal’ exit have increased.” Yet, lo and behold, sterling has “held onto most of its gains.”
Bloomberg attributes this in part to “the restored unity” of Prime Minister May’s ruling Conservative party, even if it is but temporary. The news service suggests that the market reaction is also owing to fears of the opposition leader, Jeremy Corbyn. “While a no-deal Brexit is a clear worry given the potential for economic carnage, the prospect of a hard-left Labour government under Corbyn is arguably even more troubling,” it reckons.
We have a different view, of course. What if, after all, the pound is being buoyed not by the so-called unity of Mrs. May’s party in the face of Mr. Corbyn but rather by the logic of a no-deal Brexit itself? Maybe the market actually approves of a no-deal Brexit, of a Britain genuinely independent of the unelected statists and regulationists who rule from Brussels. Maybe a no-deal Brexit is bullish for long-term jobs and growth and for sterling.
It’s not, after all, that Europe has offered a robust economy contrasting with that of Britain, which has stood aloof at least from European monetary union. France doesn’t even have a currency, at this stage of the game. Could it actually be that the market, with its millions of minds, has figured out what the politicians couldn’t, that in the years when Britain was a global power and its currency ruled the world, it was an independent country?