Deutsche Bank asset management arm sees 45% chance of 'no Brexit'

By Karin Strohecker

LONDON (Reuters) – Deutsche Bank’s asset management arm DWS said on Friday it now sees a 45% chance that Britain will not leave the European Union at all, as the prospects of a UK snap election, a second referendum or even revoking Brexit altogether have climbed this month.

An outlier from consensus, the giant investment firm which manages about 719 billion euros in assets worldwide raised its probability of ‘no Brexit’ to 45% from 40% in August.

If Britain were to hold another referendum, DWS said it expected the “Vote Leave” campaign to start with a “severe disadvantage”, especially if the alternative was a hard version of Prime Minister Boris Johnson’s proposed deal.

“Other paths toward ‘No Brexit’ include snap elections and/or revoking Article 50 if, at some point, that is the only way to stop ‘No Deal’,” the German asset manager said in a note to clients.

More than three years after Britons voted 52%-48% to be the first sovereign country to leave the European Union, the future of Brexit is unclear.

The European Union agreed to London’s request for a Brexit deadline extension on Friday but set no new departure date, giving Britain’s divided parliament time to decide on Prime Minister Boris Johnson’s call for a snap election.

Meanwhile DWS also trimmed its probability of a Halloween no-deal Brexit by 5 percentage points to 15%, saying it had become very hard to envision scenarios leading to such an outcome given both Boris Johnson and other Tory Brexiteers were now on record as preferring “their deal” to “No Deal”.

DWS ascribes a higher chance of Brexit being abandoned than other international investment firms. Goldman Sachs (NYSE:) has a 25% probability on Brexit not happening at all, while Nomura sees that scenario at 30% and ING at 10%.

Peter Kinsella, head of FX strategy at UBP, said he thought it was very unlikely Westminster would end up revoking the Article 50 notice to leave the European Union.

“I would not say more than 5%,” he said. “Would the EU even want a permanently divided UK in the EU?”

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