Market Bill clears first hurdle
Sterling remained close to multi-month lows against both the euro and dollar on Tuesday as the UK government won its first parliamentary vote on its controversial internal market bill which threatens to violate aspects of the UK-EU Withdrawal Agreement.
Boris Johnson, who commands a majority in Parliament and describes the bill as a necessary vital legal safety net, won the vote by 340 votes to 263 as the bill cleared its first hurdle known as the “second reading”. This was expected given the Conservatives large majority in the House of Commons. Johnson managed to keep the vast majority of his party on side by saying the most controversial part of the bill may “never be invoked” if a trade deal is struck with Brussels.
Unsurprisingly the bill has faced considerable opposition from both EU officials, senior UK ministers and former UK Prime Ministers alike. Officials have questioned the legality of the bill as it seeks to supersede aspects of the Withdrawal Agreement – a fully fledged international treaty.
The passing of the bill in its first stage may be concerning for some investors hoping for a Brexit trade deal. For instance, it was only last week that EU officials gave the UK an ultimatum to drop the bill by the end of September or face the EU withdrawing from trade talks altogether. However, it must be noted that the bill still needs to be debated and must pass the House of Lords before being implemented into UK law.
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