Two significant shifts for Brexit

After weeks of stalemate and delay over Brexit, we now finally have two significant developments in the form of evolving positions from both main Party leaders.

Firstly, Jeremy Corbyn has bowed to pressure to support a second referendum if an amendment calling for Labour’s preferred approach to Brexit (a customs union and close alignment with the single market) is defeated. Secondly, Theresa May has confirmed that MPs will be allowed to choose between no deal and an extension to Article 50 (most likely for around three months) if she is unable to get a deal through the meaningful vote by 12 March.

Both shifts are highly significant and, taken together, appear to reduce, but by no means eliminate, the likelihood of a no deal outcome on 29^th March and increase the likelihood of an Article 50 extension. However, no deal ultimately remains the default at the end of any extension period should a deal still prove elusive. In both cases, May and Corbyn appear to be moving against their own preferences under pressure to avoid further resignations, either from front bench roles or from the Party altogether. The creation of the new independent group of MPs last week has clearly been an influencing factor in both decisions.

Labour’s new position is particularly interesting. While the headlines have been focussed on their backing for a second referendum, their bottom line is that they want no deal off the table and will refuse to back May’s deal. They will therefore back whichever alternative avoids both those scenarios. Should a second referendum fail to command support in the Commons, as still seems likely, they will presumably back an extension to Article 50 and continue advocating for an alternative approach.

Theresa May’s approach, on the other hand, represents a major concession to the remainers and softer Brexiteers in her Party. This poses a big question to the ERG and Cabinet level Brexiteers who will be infuriated at this approach. They may now be faced with a straight choice on 12^th March between some variant of May’s deal and the prospect of a delay to Article 50. But they have limited cards left to play and appear to be outnumbered in the Commons. Ultimately, it appears they will not be able to out-vote an amendment favouring delay over no deal.

So where does this leave us? The two most likely outcomes now are some variant on May’s deal, almost certainly accompanied by an Article 50 delay to facilitate ratification, or a delay to Article 50 to allow negotiations to continue. Either outcome would still only represent the next small step in an increasingly protracted and politically divisive process with plenty of drama and recriminations to follow. But they would at least allow business and investors to breath a sigh of relief. At least for a short while.