GaveKal on Brexit:
Until last week there were so many permutations of Brexit that efforts to foresee events beyond the next political deadline were doomed to failure. This changed abruptly on Thursday after a meeting between Boris Johnson and Irish Prime Minister Leo Varadkar unexpectedly produced the outline of a Brexit deal, more or less along lines anticipated here in mid-July when Johnson became UK Prime Minister (see ‘Do Or Die’ Boris Is Bullish for Sterling). As a result, we can now start to scope out all the plausible Brexit scenarios and come up with some guesstimates about possible outcomes.
To understand what may happen next, one observation about Brexit politics is essential: the main obstacle to a deal is the same for Johnson as it was for Theresa May. The 10 MPs from Northern Ireland’s Democratic Unionist Party, who have kept the Tories in power, refuse to accept any new trading arrangements that might create regulatory borders between Northern Ireland and the British mainland. But at Thursday’s meeting with Varadkar, Johnson seemed to accept exactly the customs inspections and border formalities between Britain and Northern Ireland that are anathema to the DUP.