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Soft Brexit likely as Boris Johnson wins clear mandate

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Brexit will finally “get done” now that U.K. Prime Minister Boris Johnson and his Conservative Party have won big at the elections, analysts said.

“This is done, Brexit is going to get done,” Heather Conley, director of the Europe Program at the Center for Strategic and International Studies, told CNBC as early results indicated that Johnson was set to win a decisive majority in Parliament, giving him the ability to secure Brexit.

Sky News and BBC have since confirmed that Johnson has secured a commanding majority in the House of Commons, winning more than 326 seats which is needed for a majority.

“Boris Johnson will now have the mandate to move very swiftly to remove the U.K. from the EU, he will have great authority in negotiating new trade deals,” she told “Squawk Box” on Friday.

Calling the Conservative Party “now fully the Brexit Party,” Conley said the party will now “dominate” British politics for at least five years.

“It will be an extraordinary test of the many promises that the Conservative Party has given to the British people,” she said.

Johnson’s Brexit divorce deal has been agreed to in principle by the U.K. Parliament but is yet to be fully ratified by lawmakers. There have been deep divisions over the deal on offer and how close the U.K. should stay aligned to the EU after its departure from the European bloc.

The impasse and political chaos in the House of Commons ultimately led to Thursday’s snap general election as Johnson lost the slim majority he held in the U.K.’s lower chamber of Parliament.

A ‘softer’ Brexit?

Ahead of the final results on Friday, analysts said that with a clear majority for Johnson, a “soft Brexit” — the U.K. remaining in a single market within the EU — looks more likely. Both the U.K. and the European bloc would be much more closely aligned in terms of trading arrangements, avoiding disruption to trade and supply chains.

That’s in contrast to a hard Brexit, which means Britain leaves the single market, and is no longer bound by EU regulations and tariffs.

Shane Oliver, head of investment strategy at AMP Capital, is expecting a soft exit, but said a hard exit is still possible if no agreement is reached.

“But the threat of economic disruption will likely work against that particularly given that the UK will be officially out of the EU anyway and PM Johnson looks like he won’t be held back by hard line Brexiteers in the talks,” he wrote in a note on Friday.

“Markets are betting that … Brexit will be softer rather than harder,” added James Crabtree, a professor at Singapore’s Lee Kuan Yew School of Public Policy. He explained that if Johnson had gotten a narrow majority, he would have been “held hostage by the … hardliners,” and the odds of a hard Brexit would have been higher.

It’s already reflected in the markets, Crabtree pointed out, flagging the reaction in Japanese auto stocks.

“That’s why for instance, the Japanese car companies’ shares are up, because they think that the soft Brexit is going to mean that Nissan or Toyota can still operate in U.K. within a single market.”

Autos in Japan made strong gains on Friday morning. Toyota was up 2.25%, while Nissan rose 1.78%. Honda, Mitsubishi and Mazda all leaped more than 3%.

Going forward, Crabtree said it’s likely that both tracks will move in parallel — as the U.K. tries to hash out a long-term relationship with the EU, while moving forward with new deals with other countries.

— CNBC’s Holly Ellyatt contributed to this report.

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