Deutsche Bank savages 'ZOMBIE BREXIT' and says government is now in a VERY weak position
BRITAIN now has a 'zombie' government leaving the UK in an "extremely weak" position, as it heads in to two years of Brexit talks, according to Germany's biggest bank.
Deutsche Bank declared that Britain is at risk of a "crash" exit after the outcome of the election, which saw Theresa May lose her Conservative majority.
In a note issued to top investors titled 'The dawn of Zombie Brexit', Germany's largest lender offered its opinion on Britain's government over the next couple of years.
Britain could leave the European Union (EU) without any kind of transitional deal, wrote Deutsche's Bank's chief economist Mark Wall and macro strategist Oliver Harvey.
The comments could alarm market and business leaders who are hoping for an adjustment period.
Mrs May is likely to lead a "very weak" government with the DUP, at least for the short term, as the Conservatives don't want further uncertainty triggered by a leadership contest, said Mr Wall and Mr Harvey.
However, Britain's politicians pushing for a hard Brexit are likely to block the UK from making agreements with the 27 members of the EU, as the government muddles through talks, added the pair.
A financial crash or political crisis could be the only way that the UK government will eventually accept compromises with the bloc - but not before the damage is done to the economy, according to Deutsche.
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The note said: "For markets, the crucial question will be whether the pro-Brexit leadership in the government, including David Davis, is ultimately willing to support concessions.
"If not, a political crisis and/or market and economic pressure may be required to force compromise with the EU27 at some point between now and March 2019. The alternative may be that the UK crashes out of the EU without a deal."