LONDON (Reuters) - Deutsche Bank on Thursday hiked its expectation of a no-deal Brexit to 20 percent - the highest level ever - from 10 percent as the third attempt to get UK parliamentary approval for the nation’s exit from the European Union looms.
“The risks of a last-minute accident have increased,” said Oliver Harvey, head of Brexit research at the German bank, adding that “government strategy appears to be being made off the hoof”.
Deutsche Bank’s new call on a no-deal Brexit came after JP Morgan also upped its chances of an exit without a deal to 15 percent from 10 percent. The deadline for an agreement on Brexit is next Friday.
Deutsche Bank cut its estimated chances of UK Prime Minister May winning the next parliamentary vote on her Brexit deal to 25 percent, from 35 percent previously.
“In a worst-case scenario, we anticipate the government will seek an emergency extension of Article 50 even as late as the end of next week, should the third attempt to ratify the Withdrawal Agreement fail,” Harvey wrote.
He ascribed a 55-percent probability to that outcome.
The bank also closed its “short EUR/GBP” recommendation as ratification of Prime Minister May’s deal was no longer its base case.
Deutsche Bank had trimmed its expectation of a no-deal Brexit from 15 percent to 10 percent at the end of last month.
Reporting by Helen Reid; editing by Josephine Mason