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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Brexit: will a general election be held before no-deal Brexit?

MPs will table legislation to try to block a no-deal Brexit today, and prime minister Boris Johnson has warned he could call an early general election if they are successful. We provide the latest update on the Brexit saga.

Source: Bloomberg

Politicians eagerly return to Parliament today, but nobody will feel well-rested after the summer recess. Boris Johnson’s Brexiteers and those against a no-deal Brexit have already been busy trying to out-manoeuvre one another ahead of the October 31 deadline as both sides desperately try to control the narrative. With just 58 days to go, the rollercoaster ride that is Brexit has taken yet another turn.

Brexit timeline: what are the key dates for the UK’s departure from the EU?

MPs to table legislation to block no-deal Brexit

The cross-party group of MPs that are defiantly against the UK leaving the EU without a deal at the end of October are planning to take immediate action upon their return to Parliament – aware that the clock ticking down and that time is already limited following Johnson’s decision to prorogue Parliament next week.

They will put forward ‘The European Union (Withdrawal) (No.6) Bill 2019’ today, which aims to prevent the UK leaving the EU at the end of October without a deal. If approved, the prime minister would have to either (1) strike a new withdrawal agreement with the EU that can win the support of the House of Commons or (2) get MPs consent to leave without a deal.

If neither of those conditions had been met by October 19 – the day after the EU Council summit - then the legislation dictates that the prime minister must ask for another three-month extension, pushing back the Brexit date until January 31, 2020.

Johnson cracks the whip on his fragile majority

Johnson’s government has the narrowest majority possible. Just one rebel Conservative MP could potentially be enough for the legislation to pass and there is a handful that have said they are willing to do so. They include former chancellor Philip Hammond and ex-justice secretary David Gauke, with the latter stating they will put the "national interest" ahead of their own party.

Aware of the fragile arithmetic and the very real possibility that the legislation could pass and force a further delay to Brexit, the prime minister has decided to crack the hardest of whips. Having called an emergency cabinet meeting last night, Johnson made it clear that all Conservatives had to vote against the legislation. That followed reports that any Conservative MPs that dare vote against the government would be deselected at the next general election and not allowed to sit for the party in their constituencies. For those Conservatives against no-deal, they have been given a stark choice: block the opposition’s legislation or consider your career in the Conservative party – and possibly politics - as over.

Johnson believes asking for another delay to Brexit would be “pointless”, and that is justified considering there is no viable alternative on the table that can secure the support of MPs. The EU would also have to agree to any extension. It has so far be willing to extend the deadline in the belief that there is a chance a deal can be struck. Johnson is justified: the parliamentary arithmetic has not changed, so a delay right now seems like kicking the can down the road.

Johnson to call a general election if anti no-deal Brexit legislation passes

Johnson has said he will not ask the EU for another delay and allow Brexit to be pushed into next year. "I want everybody to know there are no circumstances in which I will ask Brussels to delay. We are leaving on October 31, no ifs or buts,” the prime minister said outside Downing Street.

UK general election speculation heats up as Brexit rumbles on

Johnson is expected to call a general election if opposition MPs are successful in getting the legislation through the House. Numerous reports citing senior government sources have suggested the election would be held on October 14 – less than three weeks before Brexit (and the date that the Queen’s Speech is currently due to take place to start a new parliamentary session, following Johnson’s decision to prorogue Parliament next week).

Johnson made it clear it isn’t his preferred choice. “I don't want an election and you don't want an election”, he said. However, the prime minister feels there is no chance in securing a new deal with the EU if his hands are tied and he can’t threaten the possibility of a no-deal at the end of October. If successful, the legislation would “plainly chop the legs out from under the UK position".

However, it is important to stress that Johnson himself has not said he will call a general election. Some reports have suggested the government could ignore the legislation if it is passed anyway and try to circumnavigate it. This may seem unlikely, but nothing should be ruled out in this unpredictable tale, especially considering Johnson and numerous cabinet ministers decided to prorogue parliament only weeks after stating it would be unacceptable.

Next UK general election: what you need to know

Will there be a general election before Brexit, on October 14?

The prime minister cannot call an early general election without the approval of MPs. At least two thirds of the House must vote in favour of holding an snap election, meaning Johnson would need the support of Jeremy Corbyn’s Labour party. This is another reason why Johnson feels he may need to hold an election before Brexit, because Labour would not vote in favour of holding a vote after October 31 and allow the UK to sleepwalk out of the EU with no one at the helm. It is always important to remember that no-deal is the default position.

The Labour party has been calling for a general election ever since the last one in 2017, so the idea Corbyn would vote against holding an early election seems virtually impossible. On Monday he said “I will be delighted when the election comes” and told a crowd: “"I'm ready for it, you're ready for it, we're ready for it."

Who would win a general election before Brexit?

It may seem strange that Johnson would jeopardise his ambitions to take the UK out of the EU at the end of October by calling an early general election but if the House blocks his plans then he has little choice. It will be a de-facto second referendum fought solely on Brexit – if the public keep Johnson in power then he has a mandate to leave the EU at the end of October “come what may”, or they can put the brakes on Brexit altogether by ousting him and voting for Corbyn.

Both Johnson and Corbyn are confident they can win an election, but both are aware of the risks attached to the rise of other parties that have stolen voters, like the Brexit Party and the Liberal Democrats. The polls suggest Johnson has reclaimed some voters from Nigel Farage’s party since taking over but the Brexit Party is still attracting over 10% of the vote, and on the other side the opposition vote has become split between Labour and the Lib Dems.

But it is true that those pushing for a no-deal Brexit are more united than those against it. Farage has suggested the Brexit Party could stand down altogether if Johnson is successful in pushing through a no-deal and has said his party would happily consider propping-up a Conservative government and even removing candidates to avoid splitting the vote of Brexiteers (although the Conservatives are not as keen to work with them). However, opposition parties can only agree that they do not want a no-deal, but not on what the alternative should be. The Liberal Democrats wants to abandon the idea altogether and keep the UK in the EU, while Labour wants a second referendum. They also can’t agree on who should lead the country, with the Lib Dems calling for a cross-party caretaker government led by a mutually-acceptable leader like the Conservative’s Ken Clarke or Labour’s Harriet Harman, and Corbyn believing only he can take charge if Johnson is ousted. Johnson is aware of this divide, and looks prepared to capitalise even if it carries huge risks.

Lib Dems offer alternative to backing Corbyn anti-Brexit government

Corbyn is warned that invitation for snap election is a trap

The latest polls imply no single party would be able to secure a majority at a general election, but suggest the Conservatives would comfortably win the most seats. Although Corbyn has welcomed the idea of holding an election before Brexit, his predecessor Tony Blair warned it could be catastrophic to vote in favour of an early vote before Brexit had been resolved. The former prime minister described the possibility of Johnson calling an early election as a “trap” for Corbyn, stating Labour would struggle and therefore should reject the idea.

Blair believes too many voters have fled to the Lib Dems, splitting the opposition vote, and suggested some tempted to vote for Labour in an attempt to block a no-deal Brexit “may fear a Corbyn premiership more”, paving the way for Johnson to secure the mandate he wants.

Corbyn has said Labour will promise to hold a second referendum if it was elected via a general election. It has said it would include an option to remain in the EU but has been unclear on how it would campaign during such a referendum. Corbyn said the party would advocate for remain if the other option was no-deal but has been unclear on the party’s intentions should an alternative deal be included on the ballot.

Brexit: a pandora’s box

Attention is on opposition MPs tabling their proposal to block the UK leaving the EU without a deal at the end of October and whether it passes. If it does, then markets should brace for an early general election to be called, but shouldn’t rule out further shenanigans from the government. If the legislation fails, then the likelihood of a no-deal at the end of October rises significantly. The opposition would have to revert to plan B: calling for a vote of no confidence in the prime minister. That would require the majority of the House voting to oust the prime minister – including some of his own MPs. While the Conservative rebels have made it clear they are happy to block Johnson’s no-deal, it is less likely they would be willing to vote their own party out of office and hand the keys to Corbyn.

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