Rabobank analysts note the UK PM Theresa May has said she will resign on 7 June, and her departure makes way for a Tory leadership contest that is likely to put a Brexit hardliner in the PM function with Boris Johnson regarded as the most likely winner.

• The new PM will probably try to renegotiate the EU-UK deal in order to change the Irish backstop, but the EU is expected to stand its ground.
• If the UK government opts for a hard Brexit as a result, it will face firm opposition from the British parliament.
• Such a conflict is likely to eventually lead to an early general election, a process that will need to be accommodated by a third extension of article 50 by the EU.
• All in all, we see a delay of Brexit to 2020 as the most likely outcome, but the odds of a hard Brexit on 31 October are uncomfortably high.
• A second referendum could play an important role in the electoral campaign and may open the door for the UK remaining in the EU in 2020.
• The already elevated degree of uncertainty around Brexit may rise further in the coming months and will continue to weigh on the British economy.