May Says She Will Not Seek "Long Delay" To Brexit; Pound Slides

The British Pound, which had comfortably assumed that the upcoming procedural delays had effectively put Brexit on hold indefinitely, slumped after PM Theresa May said she would not ask the EU for a long delay to Brexit - with some reports claiming she would only seek a 3 month extension - contrary to the market's expectations, opening up the possibility of the UK crashing out at the end of June.

The embattled PM who has mostly lost all control over the Brexit process, is due to write to the EU, seeking the agreement of all 27 other leaders to delay the U.K.’s departure beyond its scheduled March 29 date. But she “won’t be asking for a long extension” to the deadline, the Downing Street spokesman said.

“There is a case for giving Parliament a bit more time to agree a way forward, but the people of this country have been waiting nearly three years now. They are fed up with Parliament’s failure to take a decision and the prime minister shares their frustration.”

May, whose position is already extremely weak, may have been dealt a fatal blow to her premiership if she had been forced to concede that a longer delay might be needed to develop a completely new Brexit plan.

“I don’t see how a long delay gives certainty. Actually we’ve had a long time already,” Damian Hinds, UK education secretary, told the BBC on Wednesday. “You can’t keep kicking this ball further and further and further. You need to pick it up and run with it.”

However, as the FT notes,  May’s decision to seek only a short delay removes the pressure from Eurosceptic Tory MPs to back her plan, since they might now simply run down the clock in expectation that Britain will leave without a deal at the end of June.

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It’s not yet clear how many months delay May will ask for according to Bloomberg: the prime minister has previously proposed a delay until the June 30 to avoid the U.K. needing to take part in European Parliament elections. But such a short delay potentially poses a risk that the U.K. will face the threat of a no-deal Brexit at the end of June.

The latest confusion over delay timing means that Britain is headed for a showdown just days before it is due to crash out of the EU, especially after Jean-Claude Juncker signaled European leaders would be unable to grant an extension to next week’s Brexit deadline at a Brussels summit starting on Thursday. The comments by the European Commission president, made to German radio on Wednesday, come as EU leaders have hardened their position on Brexit, warning they would be unwilling to grant a long-term delay without a “new political process” in London.

The hardline stance in Brussels was joined by similar brinkmanship among Conservative Eurosceptics in Theresa May’s cabinet, who have warned the British prime minister they would resign if she requested a Brexit delay beyond June 30.

In his remarks to German radio, Juncker suggested the EU would wait to see whether May could secure backing for her exit deal - which is virtually impossible - at the third attempt next week before signing off an extension, the FT reported. "Theresa May has neither in her cabinet nor in parliament agreement on anything,” he said. "As long as we don’t know what Britain could say yes to, we can’t make a decision."

“So my assessment is that we won’t be able to reach a decision this week and will have to meet again next week.”

With Brexit day currently set for March 29, at which point a no deal Brexit is - as of this moment the default stance - a week of deep uncertainty for British business lies ahead, and the British Pound is starting to realize this, disappointed on the news that the delay will be 3 months at most, if that.