Brexit - Next (Wobbly) Steps

16 Jan 2019

Policy area: Brexit

Following the meaningful vote, our head of insights & EU engagement, Patrick Brown, provides our latest Brexit blog.

It always takes longer than you think, even when you account for it taking longer than you think it will, so says Hofstadter’s Law. Two years to fathom Brexit always seemed ambitious but the sense that there is so much left to do never seems to diminish. Things hit a fresh obstacle on Tuesday night, albeit one that was heavily illuminated and thus seen far in advance: Parliament voted down the Withdrawal Agreement by the largest margin of defeat ever witnessed. Many would have expected the Prime Minister to resign, but she seems to be trying to walk off what would otherwise appear to be a debilitating injury. Yet these are extraordinary times.

Immediately after the vote, the Opposition Leader tabled a Vote of No Confidence in the Government. Since 2011, UK General Elections have been on fixed terms with the next one due in 2022. Yet a vote of no confidence can still usher in a change of Government if a motion is passed ‘That this house has no confidence in Her Majesty’s Government’ by a simple majority. If that happens, then within 14 days either the incumbent Government or a new Government must command a majority in a new vote of confidence of MPs. If no-one is able to form a Government, then a General Election is called (with the associated time lag of 25 days while arrangements are made). If the Government chooses, it can also try to initiate an early General Election by asking MPs to vote for one, with a 2/3 majority required.

Having survived the vote of no confidence on Wednesday evening, the Prime Minister has pledged to work with senior parliamentarians to try to arrive at a sensible proposal for a deal that might earn the support of Parliament. It is here that the Prime Minister might be able to exercise greater leverage with European leaders and negotiators. I may be wrong, but it does seem that this is a process that may take some time, not least to try to parse some of the coalitions that have proliferated in recent weeks around very specific models of Brexit with pockets of support.  We expect further news on Monday 21st January as to what the Government intends to do next.

The Government is expected to seek meetings with EU negotiators to have one last try at extracting some concessions. Already on Tuesday, Macron, Juncker and others were seeking to manage expectations in anticipation of such demands. It is clear from the tenor of Parliamentary amendments to the motion on the Withdrawal Agreement (even if they were withdrawn) that the backstop was a source of contention, and that may be where the Government chooses to focus its energies. Yet it was not the only gripe and may even be insufficient to get the Prime Minister’s deal or variant over the line.

Variants of what happens next would also require time to assess, reason and implement. While the European Court of Justice has ruled that the UK could unilaterally withdraw the Article 50 notice, it does appear that such a step would require substantiation both to Parliament and the Electorate and at present the case has not been fully made for such a step. 

A second referendum at this point is a possibility, and following the failed vote of no confidence, some are hoping the Labour Leader might lend his explicit support. Even so, referendums are a tightly controlled process governed by the Political Parties, Elections and Referendums Act 2000 and commentators consider that a period of around 20 - 25 weeks would be needed to allow for a second referendum to happen. At this point, it is also unclear what the question might be that would settle the matter once and for all; what would be the binary states between which we would be asking the lectorate to choose given that ‘leave’ and ‘remain’ both still offer various permutations?

No Deal is the default position on the 29th March both in the Treaty and domestic legislation. Even though we do not yet know what deal might command the support of Parliament and EU leaders, we do know that No Deal has no majority in Parliament. While there are UK Government contingencies in place to address foreseen No Deal problems, some of these are time-limited measures in the anticipation that longer-term solutions will be found. From the European Commission’s perspective, its package of measures is precisely-tooled to limit the worst effects and have defined time limits in the case of matters such as financial services. There appears to be political will to avoid No Deal, but someone needs to harness that. Again, the Prime Minister volunteering to work with other parties to find a solution is the right call and will also stave off more embarrassment for the Government such as last week’s rebellion on HM Treasury tax raising powers.

To us, it does seem likely at this point that the Government will seek an extension to Article 50. With around 70 days to go and not much of an idea of an outcome, many business groups have been saying that the Government now needs to give itself some breathing room to find a deal that will command the support of Parliament and the electorate. How long an extension remains to be seen. The easier ask would be up until July (i.e. just before the European Parliament takes its seat since there are constitutional issues at stake there for the EU if the UK is still a Member State but is not represented in the EP). The harder ask would be to extend Article 50 beyond that date, and it also may end up meaning that any transition period would be shorter to avoid issues with the changeover in EU Budget Periods at the end of 2020. Again, the EU is most likely to grant an extension if it is conducive to reaching an agreement, not if it is simply prolonging the inevitable; all the more reason for a cross-party approach at this point.