No-Deal Brexit? Goldman Sachs It's More Likely After Parliament Vote

No-Deal Brexit? Goldman Sachs It's More Likely After Parliament Vote

Speaking at a debate on the crisis for European lawmakers, the EU Commission president reiterated the EU position that the withdrawal agreement already signed previous year with Prime Minister Theresa May cannot be re-negotiated.

The backstop element of the deal aims to avoid a hard border between Northern Ireland (part of the U.K.) and the Republic of Ireland (part of the EU) that surrounds it.

Brexit supporters were critical of the backstop, which May included in her first EU-backed deal, because they feared it would extend European Union regulations to the UK.

An amendment to Theresa May's Brexit deal calling for the Irish backstop to be replaced with an "alternative arrangement" was backed by the Commons on Tuesday night.

But May's victory on Tuesday may be short lived.

May has said she will seek "legally binding changes" to the divorce deal but has been met with a blunt response from the EU, with European Council President Donald Tusk, among others, backing Dublin in saying it was not up for renegotiation.

An EU flag is seen outside the Houses of Parliament in London, Britain January 30, 2019.

In a speech later on Wednesday, he said: "It is vitally important that politicians in Westminster understand the overwhelming wish across society in Northern Ireland not to return to the borders and division of times past".

Goldman Sachs thinks a no-deal Brexit is more likely following Tuesday's votes in the U.K. Parliament, where lawmakers demanded proven impossibilities.

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May said that if she did not bring a deal back for a vote by February 13, she would make a statement to parliament and put forward a motion for debate on February 14.

In essence, she will use the implicit threat of a "no-deal" Brexit to clinch a deal from the other 27 members of the European Union, whose combined economy is about six times the size of Britain's.

Other frustrated European Union officials including Brexit negotiator Michel Barnier insisted the remaining 27 European Union members were united and determined not to abandon the backstop clause they believe is key to maintaining peace on the border.

It courts Brexiteers with a promise to ditch an unpopular Irish border policy in favour of an alternative, and appeals to remain-supporting Conservatives by pledging safeguards against the risk of disruption if no deal can be agreed with the EU.

"The backstop is part of the Withdrawal Agreement, and the Withdrawal Agreement is not open for renegotiation", the spokesman said.

The EU says the backstop is an insurance policy and as such can't have a time limit or a get-out clause. "The EU has been clear on this point", the president's office said in a statement. "Yesterday, we found out what the United Kingdom doesn't want".

"Ireland's border is EU's border and is our joint priority", Juncker said of the contentious issue of the Brexit border backstop. The vote was not legally binding, but has political force as an expression of the will of Parliament.

The investment bank Goldman Sachs raised its probability of a no-deal Brexit to 15 percent from 10 percent, kept its probability of a delayed Brexit at 50 percent, and revised down its probability of no Brexit to 35 percent from 40 percent.

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