The new withdrawal agreement, which comes after days of secret negotiations, will now have to be approved by both the British and EU Parliaments. It will be presented to EU leaders at the summit beginning today in Brussels, and Britain's Members of Parliament will vote on it on Saturday.
"We’ve got a great new deal that takes back control — now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment," tweeted Prime Minister Boris Johnson on Thursday morning. European Commission President Jean-Claude Juncker called it a "fair and balanced agreement."
The sterling surged to a five-month high of $1.2988 in response to the news and the STOXX Europe 600 Index was half a percent higher at 7:00 a.m. ET. U.S. futures were also pointing higher.
The contentious Irish backstop has been replaced with a complicated new arrangement. According to this, Northern Ireland will remain in the U.K.'s customs territory and follow the country's trade policy, but it will follow EU rules for goods. This means the customs border would essentially be in the Irish Sea in order to avoid a hard border on the island. The Northern Ireland Assembly will be allowed to end this arrangement in the future.
What Does This Mean
Unfortunately for investors on edge about the possibility of a "no deal" or "hard" Brexit, it doesn't appear the deadlock will be resolved soon. The Democratic Unionist party has already announced that it cannot support the deal.The DUP has 10 MPs in Parliament and their support is essential if the deal has to be approved. Jeremy Corbyn, the leader of the Labour Party, has called the new agreement "an even worse deal than Theresa May’s, which was overwhelmingly rejected."
If the deal is not approved in the U.K. on Saturday, Johnson will have to request the EU for a Brexit deadline extension. It remains to be seen if EU leaders will grant this extension.
Huge protests are expected in London today with hundreds of thousands demanding a "Final Say" vote that would allow the British public to decide the terms of any deal or whether Brexit should be reversed.