By David Meyer
December 5, 2018

The chances of the U.K. canceling Brexit have just shot up, according to economists at J.P. Morgan.

In a Wednesday note to clients, economist Malcolm Barr said the chances of no Brexit had doubled from 20% to 40%, the chances of the U.K. leaving the EU without a deal had halved from 20% to 10%, and the chances of an “orderly negotiated Brexit” were down from 60% to 50%.

The shift in the bank’s Brexit outlook is due to a couple of dramatic events that have taken place in the last couple days.

Firstly, the advocate general of the EU’s top court said in a Tuesday opinion that the U.K. could unilaterally cancel Brexit by withdrawing its “Article 50” notification of leaving the EU, ahead of the March 29th date for Brexit. This was just a non-binding opinion, but the Court of Justice of the European Union is more likely than not to agree, and its publication immediately boosted the pound.

Then British Prime Minister Theresa May suffered three crippling defeats in the country’s parliament, with rebellious lawmakers forcing her government to publish the full legal advice it had received on the Brexit deal agreed to by U.K. negotiators and their EU counterparts, and to give lawmakers direct influence on the next steps if they vote to reject the deal.

The full legal advice had already been shown to May’s cabinet, but Attorney General Geoffrey Cox, who authored the advice, claimed that it would not be in the national interest to publish anything more than a summary more widely.

“Within the ‘no Brexit’ scenarios, a unilateral revocation on the U.K.’s part looks more likely to us than a joint U.K.-EU decision to extend the Article 50 negotiating period and thereby keep the existing clock running,” Barr wrote in his note. “And a second referendum strikes us as rather more likely than a general election to be driving a decision to revoke.”

May has been adamant that it’s her deal or no deal, though she has recently started to mention the possibility of there being no Brexit at all—something she previously maintained was not an option. Meanwhile, the other EU countries have been clear that they have no desire to return to the negotiating table, and the agreed deal is a final offer.

Tuesday left May particularly weakened because Northern Ireland’s Democratic Unionist Party (DUP), which is supposed to be propping up her minority government as per a deal struck last year, turned on her in the vote about disclosing the legal advice.

Parliament’s vote on May’s Brexit deal will take place next Tuesday.

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