ABCC Brexit Update - 15 January 2019 - An Unparalleled Week in British Politics
By Paul O’Hagan, General Manager, WA, VIC & SA,
Australian British Chamber of Commerce
- The UK will leave the European Union on 29 March unless UK parliamentarians vote to delay or cancel Brexit.
- Five weeks after the vote was postponed, the House of Commons will finally vote on PM Theresa May’s Brexit deal on 15 January.
- With pro-Brexit and pro-Remain MPs hardening their positions against May’s deal, near unanimous commentary predicts PM May will lose the parliamentary vote.
- PM May made a last-ditch appeal to gain support her deal on Monday warning that Brexit would be at risk without their support. A link to the PM’s speech can be found here.
- With the likelihood of losing the vote, the Government will have three parliamentary working days to set out a “Plan B”. May would likely travel to Brussels in pursuit of further EU concessions.
- Opposition Labour Leader Jeremy Corbyn has pledged to call a vote of no-confidence should May lose the parliamentary vote.
- Uncertainty prevails with the following possible outcomes of a lost vote: “No Deal” Brexit; Renegotiation with the EU; a General Election; a second Brexit referendum; and a vote of no-confidence in the Government.
“On the rim of a Constitutional Crisis”
With the clock ticking ever louder, the UK Parliament is facing a one of the most momentous weeks in its history. Speaking on the BBC’s The World This Weekend, UK constitutional expert Lord Hennessey highlighted the scale of the situation saying, “We are going to live through an extraordinary week, writing an extraordinary page of our history. Not one of us knows the words on that page in seven days’ time….[we are] certainly on the rim of a constitutional crisis”.
Lord Hennessey’s ominous remarks come ahead of the 15 January “meaningful” parliamentary vote on PM Theresa May’s Brexit deal. May had initially intended to bring the deal to Parliament on 11 December, but was forced to delay the vote after staunch opposition from both pro-Brexit and pro-Remain MPs. Polls show the UK public remains deeply divided on the subject of Brexit with no consensus on how to proceed.
PM May’s Brexit Deal
As a reminder, PM May concluded negotiations with the European Union on the UK’s terms of Brexit late last year. The deal consists to two parts: a legally binding Withdrawal Treaty on the terms of the UK’s departure and a non-binding Political Declaration on an intended future UK/EU relationship, post-Brexit.
The most controversial element of the Withdrawal Treaty is an agreement for the UK to remain aligned to the EU’s Customs Union until a solution is found to avoid a hard-border between Northern Ireland and the Republic of Ireland. Given the fragility of peace on the island of Ireland, both the UK and the EU have placed an importance on avoiding physical infrastructure on the border. Pro-Brexit Conservative MPs believe that such an arrangement would “shackle” the UK to the EU indefinitely and argue that the UK would be unable to strike meaningful post-Brexit free trade deals with other countries, including Australia.
In addition to Brexiteer opposition to the Withdrawal Agreement, there is widespread dissatisfaction amongst parliamentarians on the vagueness of the political declaration on the future UK/EU relationship. Following the postponement of the vote in December, May unsuccessfully attempted to draw concessions from the European Union on the Northern Irish border. On January 14, a letter from the European Union stressing a “firm commitment” to finalise an agreement before 2020 was met by derision from Brexiteers. May now faces what the BBC is predicting the biggest defeat by any government in 100 years with around 100 Conservative and 10 Democratic Unionist Party MPs joining Labour, the Scottish Nationalist Party (SNP) and others in opposition to her deal.
What is expected to happen this week?
Warning that Brexit would be at risk without their support, PM May made a last-ditch appeal on Monday to Brexiteers to support her deal. May warned that trust in politics will suffer “catastrophic harm” if the Government fails to implement Brexit. A link to the PM’s speech can be found here.
May’s plea follows high drama in Parliament over the weekend with a report in the Sunday Times that pro-Remain MPs are developing a plan to allow non-ministers to take control of parliamentary timetable to introduce legislation to avoid a “No Deal Brexit”. If true, this would in effect remove a key right of a governing Prime Minister and would likely trigger a vote of no-confidence. Opposition Labour leader Jeremy Corbyn has already pledged that he would call for such a vote, should May fail to win the backing of MPs.
According to the BBC, the following developments are expected this week:
- Tuesday 15 January – Day five of debate followed by a “meaningful vote” on the PM’s deal. MPs will also get to vote on amendments that could reshape the deal. If the deal is rejected, May will have three working days to come up with a “Plan B”.
- Wednesday 16 January – May is likely to travel to Brussels in pursuit of further concessions from the EU.
- Monday 21 January – Expected House of Commons vote on “Plan B”
What happens next?
Following the likelihood of losing Tuesday’s vote, May is expected to travel to Brussels on Wednesday to seek further concessions from the EU, namely on the Northern Irish backstop. There are differing messages coming from Brussels on the extent to which the European Commission will help PM May. Until now, the EU has remained united in successfully ensuring that Brexit is more problematic for the UK than itself.
The UK has the ability to revoke Article 50 (the EU’s secession clause) and remain in the EU, but this still remains highly unlikely. A delay to Brexit is more probable but would still require approval from all EU member states.
Whilst no one can predict the outcomes of this week’s parliamentary events, there are ultimately only a number of possible outcomes:
- “No Deal” Brexit on 29 March – the default outcome unless the UK Parliament votes to delay or cancel Brexit. There are differing views on the ramifications of such a scenario with the Government claiming it would cause significant and widespread disruption to the UK economy and pro-Brexit MPs saying that in the longer term, it would be more beneficial.
- Renegotiation with the EU – requiring an extension of Article 50. After painstaking negotiations over the past two years, the EU is against such an option. However, commentators also note that a “No Deal” scenario would likely cause significant disruption to EU member states, possibly bringing the EU back to the table.
- May calls a General Election – to seek a mandate for her Government but ultimately would be a vote along the lines of Brexit and Remain. This option would also likely require an extension to Article 50.
- Vote of No-Confidence – Labour leader Jeremy Corbyn has pledged to call a vote of no-confidence if May cannot win the vote on Tuesday.
- Another Brexit Referendum – would also require an extension of Article 50 as under electoral rules, it is too late to hold a national referendum before 29 March.
With so many differing outcomes, it is difficult to underscore how correct Lord Hennessey is when he asserted that the coming week will be an extraordinary week in British politics.
The ABCC will continue to follow these developments closely in the coming weeks. We look forward to keeping members up to date with the very latest from London and what it possibly means for the Australian-British business community. Should you have any questions, please feel free to contact our office on email@example.com