Goldman Sachs ramp up no deal Brexit chances after Theresa May resigns

US investment bank Goldman Sachs has ramped up its probability of a no-deal Brexit as leading Conservatives put themselves forward to replace Theresa May as Prime Minister.

Goldman Sachs analysts raised the chances of the UK leaving the EU without a deal from 10 per cent to 15 per cent, citing the emergence of hardline Brexiters in the leadership race.

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On Friday May announced that she would resign from the post on 7 June in a tearful speech outside 10 Downing Street today, kicking off a Tory leadership race.

Michael Gove is due to become the eighth MP to enter the race, challenging bookies favourite Boris Johnson, former Brexit secretary Dominic Raab and former Commons leader Andrea Leadsom.

Four other Cabinet members, Jeremy Hunt, Rory Stewart, Esther McVey and Matt Hancock have also entered the leadership battle.

The new Prime Minister will be tasked with delivering Brexit by 31 October after EU leaders granted the UK an extension earlier this year.

Goldman Sachs said its view that a Brexit deal would be agreed in the second quarter of 2019 had now changed.

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Economist Adrian Paul said: “We pencil in an orderly EU withdrawal in late 2019 or early 2020, but our conviction is low.”

He added: “We revise up our probability of “no deal” not because this Parliament (or indeed the next) is likely to coalesce in favour of its pursuit, but because the recent performance of the Brexit Party and the Eurosceptic credentials of the next Prime Minister may strengthen the case for including “no deal” on the ballot in a second referendum to unlock the impasse.”