The markets may be getting increasingly fatigued with days which keep getting trailed as pivotal for Brexit but then fail to deliver.

That is not to say nothing significant occurred on 22 October, after a promised ‘Super Saturday’ a few days earlier turned into a damp squib. For one thing the chances of the UK leaving the EU on 31 October now look minimal at best.

However, investors still don’t know if they will be facing an election before Brexit or whether a deal will be approved allowing Brexit to be concluded before the end of the year. Which of these scenarios plays out could have a big impact on how UK assets perform in the remainder of the year.

WHAT HAPPENED?

MPs voted by 329 votes to 299, a bigger majority than had been predicted, to approve the Withdrawal Agreement Bill at its second reading. This does not mean the bill has passed as there are further parliamentary hurdles to clear but was a good start.

However, MPs then immediately voted against the so-called programme motion – in simple terms prime minister Boris Johnson’s three-day timetable for scrutiny of the bill – by 322 votes to 308. In all likelihood this makes it impossible for the UK to leave the EU with a deal on 31 October.

A no deal outcome is not impossible but looks unlikely, as we write most observers expect the EU to grant a delay until 31 January. This was the extension envisioned by the Benn Act which was brought in by MPs with the aim of preventing a no deal outcome.

However, this three month delay could almost certainly be brought to an end earlier if Johnson can get his deal agreed.

A threat to pull the bill and pivot to a general election if his timetable was rejected proved empty and instead the bill has been put on pause while the Government awaits the EU’s response.

Either Johnson agrees to accept a brief delay and makes a renewed effort to get the necessary legislation through, with the UK leaving at some point in the next few months, or he pulls the bill and looks for the support he needs from opposition parties to sanction an election.

WHAT DOES IT MEAN FOR MARKETS?

Assuming the EU offer an extension then the threat of an immediate no deal outcome will have been averted but if we have an election before Brexit then the uncertainty ratchets up again. This is likely to result in renewed volatility for the pound and UK assets, including real estate and sectors like construction, the housebuilders and the banks.

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