Second time lucky?
UK Prime Minister, Theresa May, will attempt — for the second time — to get her deal through parliament on Tuesday 12 March. Hope of it passing lies with the UK’s attorney general, Geoffrey Cox, and whether he has been able to negotiate changes to the withdrawal agreement with the European Union (EU) that prevent the possibility of the Irish backstop1 becoming an indefinite trap for the UK, a key concern for many members of parliament (MPs).
If passed with an 11th hour-style compromise, the UK will leave the EU shortly after 29 March, heading into a 21-month transition period and will start negotiations on its future trading relationship with the block. So far, there has been little sign that a compromise has been reached and the vote on the deal is likely to fail on Tuesday.
If not, what are the Prime Minister’s options?
If Theresa May’s deal is defeated on the 12 March, the government has committed to offer a vote the next day, on the 13th, on whether MPs support leaving the EU without a negotiated withdrawal agreement. Parliament has previously shown its unwillingness to leave without a deal through non-binding votes and that position is expected to be confirmed if this votes goes ahead.
However uncertainty still remains as we do not yet know how Theresa May and the government will vote on this issue. If the government’s position is to vote against ruling out a ‘no deal’ then we should expect further resignations, with a risk that some Conservative MPs may quit to join the recently formed Independent Group2, further diminishing the slim majority the government holds alongside the Northern Irish Democratic Unionist Party (DUP). Alternatively, the government could offer a free vote to its MPs but that would be surprising on a key government policy and risks further undermining the Prime Minister’s position.
The third option
If parliament rejects leaving the European Union with the deal that has been negotiated, and rejects leaving without a deal, then there will be a further vote on 14 March asking parliament whether it wants to seek a short, time-limited, extension to Article 503.
This would likely be passed, although importantly, a vote for an extension only instructs the government to request an extension of Article 50 from the European Union, which all of the 27 member states must approve. The European Union has sounded open to this possibility for either ratification purposes, or for a tangible change in government policy. However, without knowing prior to the vote what an extension would look like, parliament may find that an extension request could come with conditions, and/or a long delay, that it may not accept.
Most probable outcome? Volatility, while still in the dark on what parliament wants…
A defeat for the Prime Minister next week increases the likelihood of the government losing control of the proceedings and a potential pivot towards a so called ‘softer Brexit’ involving a Customs Union agreement. However, while next week may, for the second time, provide clarity on the fact the there is no support in parliament for the government’s agreed deal, we may still be left asking the question what deal can the parliament agree on?
The votes on the 12–14 March will likely lead to volatility within markets, and in particular for sterling, as the Brexit deadline approaches. We do not rule out an option for a third attempt by Theresa May to pass her withdrawal agreement if parliament votes against a ‘no deal’ Brexit and against an extension of Article 50. We may then learn the true measure of the 11th hour in negotiations with the European Union.
1The backstop is a measure in the withdrawal agreement between the UK and the EU, to ensure an open border — ie, no physical barriers, checks on people or goods — remains on the island of Ireland (between Northern Ireland and the Republic of Ireland) should the UK leave the EU without securing a comprehensive deal. Until a deal is struck, the UK would effectively remain inside the EU's customs union but with Northern Ireland also following some rules of the single market.
2 The Independent Group: a pro-EU parliamentary group formed in February 2019. Currently made up of eight MPs from both the Labour and Conservative parties in the UK, who quit their parties and joined forces as a group to represent “the centre ground of British politics”. The group is not an official political party.
3Article 50 is a part of an EU treaty that sets out how member countries can leave, with a two-year timetable for leaving. Article 50 was triggered by Prime Minister Theresa May at the end of March 2017 and means the UK will leave the EU at the end of March 2019.