UK Erupts After Boris Johnson Asks Queen To Suspend Parliament So He Can Pursue His ‘Very Exciting Agenda’

It looks like the chances of a no-deal Brexit are materially higher on Wednesday, although they were pretty high already.

The pound tumbled after Boris Johnson asked the Queen to suspend Parliament from September 12 until the Queen’s Speech on October 14. She later approved the request.

The move is generally seen as preventing lawmakers from hampering a no-deal Brexit, and “constitutional crisis” is being bandied about again. The pound fell more than 1% at one juncture to $1.2157. Three-month implied vol. in cable jumped to the highest since January.

Boris isn’t looking for a general election and claims lawmakers will have “ample time” to argue about Brexit, in case the last three years haven’t been sufficient.

Still, the timing is inflammatory to say the least. Johnson has promised the UK will leave the EU on October 31 come hell or high water, and some desks have recently adopted a no-deal Brexit as their baseline scenario.

Read more: No-Deal Brexit Becomes Base Case For One Bank, Prompting Change To Fed Cut Call

The UK economy contracted in the second quarter, far worse than the stagnation consensus was looking for, and the chances of a recession are elevated.

“I understand Downing St thinks they have some legal protection from court cases – there is going to be HUGE row”, the BBC’s Laura Kuenssberg said, adding that “only a tiny handful of Cabinet ministers knew about this move”.

Gilts obviously rallied on the assumption this makes a BoE rate cut more likely. A spike in inflation appears to be a foregone conclusion thanks to the confluence of factors at play. “Any split of the unions devalue the pound, raising the costs of imports like fuel while recessionary pressures should lead to accommodative monetary policy”, Bloomberg’s Eddie van der Walt wrote in London. Throw in any fiscal stimulus and you’ve got a recipe for rising prices.

“We expect the country to enter a shallow recession in 2020 and the Bank of England to cut rates by 50bp by mid-2020, despite some initial jump in inflation on the back of the attendant currency depreciation”, Barclays wrote earlier this month, cautioning that “the risks to our forecasts are tilted to the downside” where that meant “a deeper recession could take hold should the expected disruption and confidence effects of a no-deal outturn be larger than expected”.

Obviously, Wednesday’s developments set up a highly contentious situation. “The prime minister’s decision is deeply questionable and frankly pretty outrageous”, Dominic Grieve told the BBC, which kicked off the media coverage of Wednesday’s drama. “It’s a deliberate attempt to make sure that Parliament doesn’t sit for a five-week period”.

A no-confidence vote now seems likely.

“If it is impossible to prevent prorogation, then I think it’s going to be very difficult for people like myself to keep confidence in the government, and I could well see why the leader of the opposition might wish to table a motion for a vote”, Grieve added.

Jeremy Corbyn released a statement. It reads as follows:

I am appalled at the recklessness of Johnson’s government, which talks about sovereignty and yet is seeking to suspend parliament to avoid scrutiny of its plans for a reckless No Deal Brexit. This is an outrage and a threat to our democracy.

Speaker of the House of Commons John Bercow, is furious. “However it is dressed up, it is blindingly obvious that the purpose of prorogation now would be to stop Parliament debating Brexit and performing its duty in shaping a course for the country”, he said.

“Boris Johnson is trying to use the Queen to concentrate power in his own hands – this is a deeply dangerous and irresponsible way to govern”, Labour MP Yvette Cooper tweeted.

“It would be a constitutional outrage if Parliament were prevented from holding the government to account at a time of national crisis. Profoundly undemocratic”, Philip Hammond remarked.

Boris explained that this is really about “making the streets safer”, “leveling up education funding”, “investing in infrastructure” and “decreasing the cost of living”.

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See? This is all about getting on with necessary business, and it just happens that it makes it more difficult to stop Brexit.

The sooner everyone gets on board with Boris’s “very exciting agenda” – which will almost surely include a recession and God only knows what else once the the country leaps out of the EU with no parachute – the better off everybody will be.***

***Results may vary.