IN THE latest twist in the tale of Brexit, the Supreme Court has ruled that Prime Minister Boris Johnson’s decision to prorogue Parliament was “unlawful”, making the likelihood of a no-deal Brexit increasingly unlikely.
MPs will return to Westminster on Wednesday, where they will have just five weeks to agree to a new Brexit deal. Parliament has already voted against a ‘no deal’ Brexit, and politicians have repeatedly rejected Johnson’s call for a general election. This means that the most likely outcome is that the UK asks for an extension to the 31 October deadline – a request that Johnson has thus far refused to entertain.
The ongoing confusion around the UK’s economic and political position has left small- and medium-sized enterprises (SMEs) in a state of limbo, as business owners simultaneously try to plan for a deal, no-deal, or an extension of the negotiating period. Peer-to-peer lending platforms have been quick to express frustration on behalf of their SME borrowers and wary investors, calling for an end to the uncertainty and for a deal to be put in place.
“The Brexit saga continues with the judgement of the illegality of the proroguement, and it continues to harm the authority of the current democratic system in its wake,” said Stuart Law, chief executive of Assetz Capital.
“We all want an end to this uncertainty as it is causing huge harm to the country – it is economic vandalism at its worst. Even today we are still none the wiser as to whether we leave with no deal, some sort of deal or just cancel Brexit and get back to the day job.
“SMEs cannot prepare for such a wide range of outcomes realistically and GDP will be the ultimate loser in this almost whichever outcome we end up with.”
David Bradley-Ward, chief executive of Ablrate, said he was unsure whether the decision would have an effect on the industry at the moment. “A deal is always the best option and if this forces one then all good,” he added. “My fear, going forward, is this sets a dangerous precedent for future legal cases against the government which could destabilise the economy worse than Brexit.”
Paul Sonabend, executive chairman of Relendex, said that the Supreme Court decision was not a surprise, as his platform has already seen signs that investors are ruling out the possibility of a no-deal Brexit.
“We have noticed a substantial increase in the level of loan enquiries to fund the development of residential property over the last week which is telling us that entrepreneurs are already discounting the possibility of a no-deal Brexit,” Sonabend said. “We would expect this trend to continue as it becomes ever more clear that Boris Johnson cannot call the shots and that whatever the outcome it will not severely impact the UK economy.”
Sterling rose in response to the Supreme Court decision,but financial experts urged retail investors to continue to exercise caution, as there may be more Brexit-related volatility to come.
“The decision from the Supreme Court that proroguing parliament was illegal means that, for this morning at least, the risk of a no deal Brexit has receded,” said Adrian Lowcock, head of personal investing at investment platform Willis Owen. “That has sent the pound higher and the FTSE 100 lower as the two tend to go in opposite directions when it comes to Brexit.
“However, investors should be wary. The decision doesn’t change as much as many may think. The uncertainty remains as high as ever and the Prime Minister has a number of options available, including proroguing parliament again or stepping down, both of which would add to the uncertainty.”
However, Nigel Green, chief executive of one of the world’s largest independent financial organizations, deVere Group, said that the Supreme Court decision will not deliver a major boost of optimism to the pound and UK financial assets, because the Brexit timetable remains in place.
“The Brexit-fuelled political uncertainty deepens, and this will temper any significant upside,” he said.
“As the saga and uncertainty continues, it can be expected that both UK domestic and international investors in UK assets are increasingly likely to move assets away from the UK to grow and safeguard their wealth.”