Article 50, Backstop, Brexit, British Government, Theresa May

So… #Brexit? What happens next…? No one knows…

This blogpost was written early on Wed Jan 16th

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Last night the UK government lost the vote in the House of Commons on the Brexit agreement it had negotiated with Brussels by 432 to 202.

This is the largest defeat suffered by a government in over 100 years. In normal times a defeat such as this on the government’s flagship policy would result in the fall of the government or, at the very least, the resignation of the Prime Minister.

But Brexit times are not normal times and today the government will, in all likelihood, win the vote of No Confidence tabled by the Labour Party. While over 100 Conservative MPs voted against the government’s Brexit plans, they will not vote to bring that government down, thereby possibly letting Labour leader, Jeremy Corbyn, regarded by many as a radical leftist, into 10 Downing Street.

So, the UK government is likely to survive, though whether Theresa May stays on as Prime Minister may be another matter.

So, what happens next? Absolutely no one knows.

Only one thing is certain. Back two years ago, 461 MPs voted to trigger the Article 50 process, with the UK giving the EU two years’ notice of its intention to quit the bloc. As the law stands, the UK will leave the EU at midnight, Brussels time, on March 29th next, with or without an agreement unless a majority in the House of Commons decides otherwise. Leaving is the default position.

The problem is that while there was a majority last night against the Brexit deal on the table, there is no majority for any alternative plan. Many hardline Brexiteers would be more than happy to leave with no agreement, some Conservatives, and many on the Labour side and among the smaller parties, would like to see Brexit scrapped altogether, maybe by way of another referendum, while others are pushing for the UK negotiate a “Norway-style” European Economic Area arrangement with Brussels.

While there might be no majority for any particular way forward, there could be a majority in favour of asking the EU to extend the March 29th deadline. But while the EU might be prepared to do so were that to facilitate the holding of a general election of another referendum it may be reluctant to agree if the sole purpose of the extension is to give the UK more time to agonise over what it should do.

When you give your employer notice that you are leaving you generally don’t not get to stay on past your planned leaving date simply because you have not found another job in the meantime. Decisions have consequences.

What happens over the next few days and weeks will be critical, but no one can say what that will be. Would the EU be prepared to offer the UK a radically different deal? Unlikely.

It constantly needs to be kept in mind that the UK is voluntarily leaving the EU. It has not been expelled not asked to leave. Leavers in any walk of life generally don’t get to dictate the terms under which they will leave.

The deal that was rejected last night consisted of three parts.

  • First, The Withdrawal Agreement which covered the settling of the UK’s financial obligations to the EU, the rights of EU and UK citizens living in the UK and EU respectively, and measures to ensure that there would be no hard border on the island of Ireland.
  • Second, a Political Declaration which set the framework for talks between the EU and the UK on the future economic, trade and political relationship between the two parties, talks which will begin when the UK actually leaves.
  • Third, and very much overlooked in recent days, a “standstill” transition arrangement of between 21 months and close on four years, during which the UK would have remained a de facto member of the EU while the future relationship was finalised, so providing short-term certainty for citizens and businesses.

It would appear that many UK MPs have never fully understood the sequential nature of the withdrawal process and what they really want is the future deal between the EU and the UK to be on the table before the UK actually leaves.

This the EU cannot do as the EU treaties prevent it negotiating a trade deal with an existing member. Hence the transition period which provides the time and space to negotiate future terms, a sort of decompression chamber.

Even if the Irish “backstop” was removed – again unlikely as that would signal the EU favouring the interests of a country that was leaving over the interests of a remaining member – it would probably not solve the problem as it would leave the future relationship still to be negotiated. MPs do not want a “blind Brexit”, leaving the EU without knowing what happens next but that’s the way the EU treaties sets things up.

Where does all of this leave businesses? In a dense fog of uncertainty, that’s where.

From the beginning, since we started writing about Brexit our approach has been: Hope for the Best, Plan for the Worst. It is time to activate those plans.

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