- UK MPs to vote on 8 Brexit options this evening
- Multiple-choice format allows more than one selection
- Turkish Lira in the spotlight
Speaker of the House, John Bercow has announced that there will be 8 options for the indicative votes this evening as Parliament seeks to take control of the Brexit process. The stand-out omission is option C or the Malthouse amendment which would have seen MPs have the option to vote on what is essentially May’s deal but with a unilateral right to leave the backstop - something the EU has steadfastly refused so far. While no deal and a 2nd referendum make the list, the most likely candidates to succeed are the 4 options which revolve around a softer version of Brexit; D, H, J and K. There is a chance that lawmakers behind this will have to ultimately decide which of these options they prefer, but for now there is little danger of splitting their votes as they can select multiple outcomes.
It remains unclear how we proceed after tonight’s votes, with some seeing 317 as a key number to watch - that is the amount of votes needed to ultimately pass through parliament - while others believe 242 - the number of votes that backed May’s deal at the last try - is really the threshold to keep in mind. It’s worth pointing out that the votes on these are not legally binding, but it is probable that any option which gets more than 242 will be given the chance to proceed to a final vote expected for the start of next week. Finally, the speaker has once more reaffirmed that a third meaningful vote on May’s deal would need to “meet the test of change” to be carried out, although privately the PM is still likely to believe that she can get another go.
Turkish Lira attracting unwanted attention once more
There’s been a sizable decline in the Turkish Lira, with the currency falling almost 2% against the Euro as concerns begin to mount once more. Last year saw a large and rapid depreciation of the Lira which culminated in a single-day drop of around 20% - twice the size of the fall for the pound the day after the Brexit referendum in 2016 - as a diplomatic crisis with the US over the arrest of pastor Andrew Brunson saw investors flee and the currency crash. Since then there’s been an impressive recovery, helped by Brunson’s release, but the large drop last August was a long-time coming with deep-rooted problems mounting before the arrest served to act as the straw that broke the camel’s back.
The overriding root cause of the Lira’s weakness is the unorthodox monetary policy favoured by President Erdogan who contrary to almost all conventional wisdom believes that rising inflation can be countered by cutting interest rates. Price pressures in Turkey have escalated in recent years, and a reluctance to follow the monetary policy tightening required to curb this has failed to keep the increases in check. The latest efforts to support the Lira is by attempting a crackdown on short selling by hiking the interest rate for overnight borrowing to over 1000% in a bid to dissuade speculators from taking aim at the currency. Unfortunately for Turkey these tactics to fight market forces almost always end in tears and what appears to be a last-ditch attempt to prop up the currency ahead of crucial local elections this coming weekend may well sow the seeds for another run on the Lira.