- No Deal (~30%) – If negotiations take a turn for the worse in the coming days, odds of a disruptive no-deal, “hard” Brexit, where the UK reverts to the international trading rules set by the World Trade Organization (WTO), will rise. In 2019, the EU accounted for 43% of UK exports and about 50% of UK imports, so the imposition of new WTO tariffs and stricter border controls could tip the vulnerable UK economy back into recession in 2021.Traders still see this scenario as relatively unlikely, but it would certainly be very disruptive to the UK economy if it comes to pass. In terms of market moves, the pound would likely fall sharply, as would the FTSE (with banks and importers particularly vulnerable) as citizens and firms adapt to a dramatically different economic environment. Down the road, this scenario could also lead to the breakup of the United Kingdom, with support growing for both Scottish independence and a potential reunification of Ireland.
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