Sometimes financial markets change the course of political events. More often they do not. A market panic persuaded the US Congress to legislate in favour of the troubled asset relief programme during the financial crisis in 2008. Four years later, turmoil on the trading screens extracted a commitment by Mario Draghi to do “whatever it takes” to safeguard the bond markets of eurozone countries. But these were the grand exceptions. Brexit is not one of those. From a financial perspective, Brexit has largely been a non-event so far — except in the foreign exchange markets. If you, like Theresa May, hope that financial markets will be able to put pressure on the UK parliament to ratify a withdrawal agreement, you are wrong. Just look at how markets reacted last week when May’s cabinet revolted against her plan. The sterling exchange rate went down a bit; so did some share prices. But UK government bond prices went up. This means that it has become cheaper for the UK to raise debt. This...

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