Betting exchange Smarkets says the odds of a UK-EU trade deal by the end of this year have declined by 18%, lengthening to near 50-50.
The odds of a deal have now fallen to 49%, Smarkets said, down from 67% a month ago.
Smarkets puts the lengthening odds down to the introduction of the UK government’s Internal Market Bill on Wednesday (9 September). The new bill has attracted controversy as it overrides the UK’s international treaty obligations. The bill states the UK does not have to comply with the Northern Ireland protocol, a key part of the EU Withdrawal Agreement signed last year.
The protocol gave Northern Ireland the same trading rules and standards as the EU in order to prevent customs checks and a hard border with the Republic of Ireland. Reneging on this commitment has provoked anger in both Ireland and the EU.
Smarkets head of political markets Sarbjit Bakhshi said the Internal Markets Bill was a “gamble” and “clearly the UK government’s last-ditch response to the lack of progress in EU talks.”
Smarkets’ lengthening odds tally with predictions of other observers. Jordan Rochester, a currency strategist at Nomura, this week said the odds of a no deal Brexit had risen to 40%.
Experts said the Internal Markets Bill could also scupper Britain’s chances of striking a quick trade deal with the US.
Congresswoman Nancy Pelosi on Wednesday said reneging on the Northern Ireland Protocol had implications for the the Good Friday Agreement and would give the UK “absolutely no chance” of signing a US trade deal.
“The UK must respect the Northern Ireland Protocol as signed with the EU to ensure the free flow of goods across the border,” she said.
Smarkets said the chance of a UK-US trade deal being struck this year were now just 14%.
“With the UK's intentions seemingly breaking international law, and potentially undermining the Good Friday Agreement, the government is jeopardising a trade deal with the USA and the EU at the same time,” Bakhshi said.
Adrian Paul, an economist with Goldman Sachs, on Thursday said the Internal Markets Bill had “significant implications for the integrity of the EU’s Single Market, the integrity of the United Kingdom, the degree of trust between the UK and the EU, and the likelihood of a UK-US trade deal”.