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What are the Brexit options now?

Words by:
Managing Director
January 15, 2019

Tonight is the night that Parliament will finally be given its say on Theresa May’s Brexit deal. After weeks of delay, the question on everyone’s lips is not whether Parliament will reject Mrs May’s deal, but by how much she will lose. With just hours left until the vote, there is no indication that enough MPs have switched their public opposition to the deal to prevent a significant defeat for the government.

It is time, therefore, to take a look ahead at the potential scenarios that might play out in the coming weeks. We have outlined below our analysis of several potential outcomes from the current chaos.

 

Defeat so big – May has to go?

There is talk of tonight’s defeat surpassing the worst defeat for a government in living memory. So is there a chance this could precipitate a move against May that could force her downfall or her voluntary resignation? In short, no. Theresa May has given no indication that she has any intent of stepping aside and even the most strident critics of her deal have not called for the Prime Minister to resign. Indeed, the DUP have stated they will continue to support her government in a confidence vote.

Likelihood: not happening

 

Parliament takes control

What of recent press reports that MPs are mobilising to seize control of the business of the House of Commons to prevent a no deal Brexit? Nick Boles is reportedly ‘plotting’ to pass a Bill that would force the government to seek an extension to Article 50 or to revoke Article 50 altogether. Even if control over the Commons order paper was wrestled away from the government, this would still be a very tall order to organise and pass before March 29th and is not realistic. Furthermore, proposals for the Liaison Committee to take control of the process from the government were quickly dismissed by the chair and vice-chair of the Liaison Committee. While Parliament is certainly flexing its muscles, it cannot ultimately seize total control of the Brexit process.

Likelihood: not happening

 

May’s deal passes at the second (or third) attempt

The government has had plenty of time to plan its next steps should Parliament reject the deal first time round. One of the most likely next steps will be simply to have another go in a second parliamentary vote, and perhaps even a third attempt too.

The success of this approach will be influenced by a number of factors. First up, the scale of the defeat in the first vote. Losing by more than 200 votes will make it much harder to simply ask MPs to try again, whereas a better than expected showing for the government will encourage them that all is not lost. The fact that 100 Conservative MPs voted against her in the no-confidence vote is likely to set the benchmark against which the scale of defeat is measured.

Secondly, can the PM secure any further concessions from the EU? So far the Commission and remaining member states have held firm to the line that there can be no change whatsoever to the legal text of the Withdrawal Agreement. Clarifications were offered round the sides of the deal on the EU’s desire to avoid using the backstop (while stopping short of placing a time limit on it) in the build up to tonight’s vote but it is difficult to see how much more can be offered.

Thirdly, will MPs be given the opportunity to test parliamentary opinion on other alternatives? A series of votes on alternatives such as no deal, Norway-plus or a second referendum might actually play into the Prime Minister’s hands if it demonstrated that none of them can actually command a Commons majority.

Finally, the way in which the world outside Westminster responds to a rejection of the deal can’t be ignored. The markets have been subdued for some time due to Brexit uncertainty and a drastic reaction to rejection of May’s deal (such as a sterling crash or a major crisis in the FTSE 100) might give MPs something else to think about. However, given the widespread expectation that the deal will fall at the first vote it is entirely possible that this outcome is already built into market assumptions.

So what needs to change between tonight’s anticipated defeat and a successful subsequent attempt? The most likely route to reversing the result will involve Theresa May providing concessions targeting Labour MPs on issues such as employment rights, the growing realisation that other alternatives are not realistic options and the simple fact that the clock continues to tick towards no deal. It may also include giving a more specific, and accelerated, timetable for the Prime Minister’s departure.

Likelihood: The most likely outcome, but one which requires the Prime Minister to limit the scale of tonight’s defeat and for Parliament to test and fail to agree on several alternatives.

Timing: It will need to happen soon and would probably require a short (‘technical’) extension to Article 50 (see below).

Implication: This may allow a return to something resembling normal service in UK politics but May will have been severely weakened and it is likely that more detail on an accelerated and specific timetable for her resignation will have formed part of the process of getting approval.

 

Article 50 extension

If the UK is to avoid a no deal Brexit, this now looks almost inevitable. Even if May’s deal is approved tonight, we are still on a very tight timetable to get the relevant legislation implementing the Withdrawal Agreement on the statute books by March 29th. Any further delay means that an extension is likely to be required for any sort of deal to be ratified without the clock ticking down to a no deal scenario that nearly everyone wants to avoid.

However, it is important to distinguish between two different Article 50 extension scenarios. The most likely outcome would be what the European Commission has described as a ‘technical’ extension. This would be for a month or two simply to allow more time for the deal to be ratified once the UK Parliament approves it in the meaningful vote. This would be very likely in the scenario considered above where the deal is approved at the second or third attempt.

The much trickier scenario would be a longer-term extension intended to facilitate the reopening of substantive negotiations. The EU has been clear that there can be no changes made to the legal text of the Withdrawal Agreement and a longer-term extension would likely only be considered if there was a material change in the UK political landscape, or a radical shift in the UK’s negotiating position. This most likely means a decision to hold a second referendum or a General Election.

Furthermore, it is important to remember that the decision to extend Article 50 must have the unanimous backing of all remaining member states. One single dissenter can block an extension and trigger no deal.

Likelihood: Very likely for a ‘technical’ extension but anything more substantial could only be the result of a significant change in the UK political landscape (such as a second referendum or a General Election).

Timing: Likely to push Brexit day back by a month or two.

Implication: Brexit is delayed but not reversed while more time is dedicated to passing Brexit-related legislation rather than focusing on domestic priorities.

 

No Deal

In one sense, a no deal Brexit is getting more likely with every day that passes without an alternative approach being agreed. No deal remains the default scenario that will happen by automatic operation of law on March 29th 2019. There are only two ways to avoid no deal; vote for May’s deal or extend (or revoke) Article 50. If the whole Brexit saga has demonstrated anything, it is that opposing no deal is much easier than finding a viable alternative.

Likelihood: Getting more likely by the day.

Timing: 29th March 2019.

Implication: A severe economic shock and a step into truly uncharted territory which could bring an end to Theresa May’s premiership, or even the Conservative government.

 

Second Referendum

Support for a second referendum has grown within Parliament in recent weeks but both the government and the Labour front bench still strongly oppose it. It is therefore difficult to see how a parliamentary majority in favour can be manufactured. The position adopted by Jeremy Corbyn is critical. If he decides to swing behind a so-called ‘people’s vote’ it could be a game changer. But that is a very big if.

The official position of the Labour Party is to first push for a General Election with all other options remaining on the table if they fail to secure this. But Jeremy Corbyn has given no indication that he is willing to swing his support behind a second referendum.

There is also genuine concern among many MPs of all persuasions around the potential impact on trust in the democratic process if a second referendum is held. Furthermore, the divisiveness of the first referendum and its consequences for the tone of political debate will still weigh heavily in the minds of many MPs. For now, this looks unlikely but it can’t yet be completely discounted.

Likelihood: Slim but not impossible.

Timing: If Parliament is to express a preference for this it will need to do so soon after tonight’s vote, although fierce debates over the precise nature of the question and passing enabling legislation could take months.

Implication: Huge. Potentially a loss of what little trust there is left in the democratic process as well as yet more (much more) valuable time spent focusing on something other than domestic policy priorities.

 

General Election

The likelihood of a General Election taking place before 2022 has significantly increased as a result of the political turbulence surrounding Brexit and the weakening of May’s already fragile minority government. However, there is very little appetite among Conservative MPs and (crucially) the DUP for an immediate (pre-March 29th) election. The spectre of a Jeremy Corbyn led Labour Government casts a very long shadow and is likely to ensure that the Conservative and DUP benches support May in the vote of confidence that Labour plans to call following defeat in tonight’s vote. Nevertheless, the medium-term reality is that governing without a Commons majority is extremely difficult. If the fallout from tonight’s vote further hastens May’s departure as Prime Minister, her successor is likely to seek their own (stronger) mandate well before 2022.

The one scenario with the potential to trigger an election before March 29th would be if the government decides to pursue a managed no deal Brexit. In this scenario, several remain supporting Conservative MPs have indicated they may go as far as resigning the whip and voting against the government in a confidence motion. Whilst extreme, this scenario is no longer unimaginable.

Likelihood: Increasingly likely in the medium term, possibly later in 2019 or Spring 2020.

Timing: Not necessarily before March 29th unless the Conservative Party splits over impending no deal Brexit.

Implication: Opens the door to a Corbyn administration.

 

Whatever the outcome of tonight’s vote, the UK is set for a period of continued political uncertainty which will be challenging to navigate. If you are interested in the support of our expert team of consultants, please do get in touch.

 

 

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