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What ever happened to trust?
What ever happened to trust?

A political insight

Words by:
Managing Director
March 13, 2019

Last night Parliament overwhelmingly rejected the slightly revised Withdrawal Agreement put before them by Theresa May. The government was defeated by 149 votes, a narrower margin than the first meaningful vote (230) but still one of the largest defeats by any government in parliamentary history. The Attorney General’s legal opinion that ‘the legal risk remains unchanged’ that the UK could remain trapped in the backstop torpedoed the Prime Minister’s efforts to reassure Conservative Brexiteers and the DUP.

Attention will now turn to votes to be held in Parliament today and tomorrow on the prospect of a no deal exit and on whether to request an extension to the Article 50 process. Neither vote is straightforward and will be subject to multiple amendments but they allow Parliament to take on a formal role in shaping the direction we now take.

The vote on no deal tonight is highly likely to result in Parliament seeking to take no deal off the table. While this is clearly not fully within Parliament’s power – as no deal remains the legal default if a deal or extension is not agreed – it is expected to pave the way for Parliament to instruct the government to request an extension to the Article 50 process in tomorrow’s vote.

The key questions are how long such an extension should last and what it would be designed to achieve. Should it be kept short to avoid the UK having to participate in the European Parliament elections in May or should we go long and provide time for a substantive renegotiation? Parliament has the opportunity to indicate its preferred answer to both questions but ultimately the EU will have to agree to any extension unanimously and may seek to impose unpalatable terms on it.

The EU itself has yet to coalesce around its preferred extension scenario and the indications are that they will wait for the UK to put forward a ‘reasoned’ request i.e. it must have a clear purpose. It is expected that any such request would be considered at the next European Council summit on 21st and 22nd March. If we simply ask for more time to consider the same deal or to renegotiate terms that have already been rejected by the EU then there is a clear possibility the request will be rejected and we will head towards no deal at the end of this month.

This now leaves us with significant uncertainty over the ultimate outcome of this process. But there are several scenarios that remain in play.

A shift to a softer Brexit, facilitated by an Article 50 extension

The path to this could come from a cross party shift to remaining in a customs union and significant elements of the single market as favoured by the Labour leadership. Theresa May has steadfastly resisted this and it would require a significant portion of the Conservative Party to break ranks to deliver it but there is a possibility it would have the numbers in Parliament to back it.

There is still a possibility that Theresa May’s deal could eventually be brought back before MPs for consideration a third time and passed

This would require a huge climb down from a large number of Parliamentarians and is only likely once all other options have been exhausted but remains a distinct possibility. There are several ways this could play out: if an Article 50 extension request is rejected by the EU, leaving a stark choice between this deal and no deal; if an Article 50 extension is only available for a very long period of a year or more and with extremely unpalatable terms (potentially scaring the ERG into viewing Brexit itself to be at risk); or at the end of a short extension, most likely until June, which failed to produce an alternative deal, with the choice again between this deal and no deal.

No deal remains a distinct possibility

If Parliament continued to reject May’s deal and no extension can be agreed (or is not requested) the UK will leave the European Union without a deal on the 29th The government has this morning published its short term plans for this scenario in relation to the Northern Ireland border with Ireland and tariffs. These essentially amount to deliberately not policing the border in the immediate period after Brexit and not charging import tariffs on the vast majority of goods entering the UK from the EU (though with notable exceptions such as agricultural imports and cars).

Whatever plays out in the coming days there will be significant and lasting consequences for both main political parties. The Labour Party has so far attempted to tread a careful line, refusing to back May’s deal and hoping to either force a shift to a softer Brexit (for which they can claim credit) or to allow the Conservatives to take the blame for a shambolic no deal Brexit. However, much of their membership is desperate for a second referendum and if the UK does go over the no deal cliff edge then their refusal to back a deal will have been a major contributing factor.

Most significantly, the future of the Prime Minister feels more precarious than it ever has. There is an increasing feeling that her tenure in No 10 has been drastically shortened and it is hard to see how she could oversee the implementation of a softer Brexit that she has consistently opposed. However, her remarkable durability has already seen her carry on in circumstances that would have been terminal for any other Prime Minister and there is still no obvious, viable alternative leader among the Conservative ranks.

Ultimately, the decisions taken by Parliament in the next 48 hours will go a long way to shaping the final outcome of the Brexit process and the future of this government.

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