Earlier today, Theresa May announced that she was indefinitely postponing the House of Common’s vote on the Brexit deal she agreed with the EU three weeks ago. The Prime Minister acknowledged that if there had been a vote tomorrow, her deal would have been heavily defeated by MPs.
This means that with just 75 working days to go before Brexit day (29 March 2019), we still have no agreement on what Brexit will be. We are living through a period of greater political volatility than any time in the last forty years. We stand on the threshold of a huge change to the UK economy and society but we still do not know exactly what form that could take, how fast it could happen and how big a change it may be.
What happens next?
The Prime Minister indicated that the ‘Northern Ireland backstop’ provisions of the deal is the main element that MPs oppose [click here for our explanation of what the backstop means for business]. She will now seek further concessions from EU leaders at their EU summit on Thursday; although the EU President Donald Tusk today indicated that there may be very little room for manoeuvre.
We do not know when Parliament will now have a chance to vote on Brexit. Theresa May hinted it might be 21 January, but in theory she could call a vote as late as 28 March.
The scale of discontent amongst MPs means we may see some radical responses and political manoeuvrings. The Labour Party may call for a vote of no confidence in the government and try to push for an election. Another group of MPs may push for a ‘People’s Vote’. And another faction of MPs (across party) may push for a ‘Norway Plus’ Brexit (single market and customs union membership). Theresa May’s own ministers may urge her to adopt a radical change of plan or resign.
Any of this could happen swiftly; but may drag out over Christmas and well into January or even February.
The options ahead are set out in this flow diagram.
As you can see, there are many different potential outcomes. The default remains a ‘No Deal’ Brexit: unless MPs can agree on something (and the EU agrees too), then we will leave the EU on 29 March with No Deal. As Matt Hancock, the health minister, said last week: “No deal is what happens automatically unless parliament passes something else.”
At the moment Parliament is deadlocked and unable to agree anything.
What does this mean for business and other organisations?
- Don’t wait for the politicians to reach an agreement. It could be February or even March before this political deadlock breaks. By then it will be too late to make contingency plans for 29 March. So…
- If you can, plan for all eventualities. If you haven’t already, do some scenario planning, assessing how the different options impact on your organisation, your markets and suppliers. We can help through our Brexit Advisory services.
- Identify opportunities that uncertainty and disruption in the market create: where are your competitive advantages; how can your goods or services help others navigate this uncertain time; are there opportunities to increase exports in the rest of the world or acquire undervalued assets?
- If nothing else, plan for No Deal: and work out when you need to implement plans to ensure ongoing business continuity. The Prime Minister said today: “for as long as we fail to agree a deal, the risk of an accidental no deal increases. So the government will step up its work in preparation for that potential outcome”. Government is ramping up its No Deal contingency planning; so should you.
- Get match fit: focus on the business basics: protecting cashflow; insulating your balance sheet; retaining and attracting talent; sweating your assets; meeting customer needs; and removing unnecessary costs.
We will keep you updated on developments as they happen over the coming days and weeks. We will be sharing practical examples of what other organisations are doing to prepare, including ‘no regrets’ decisions you can take now and contingency plans you should have in place.
Above all else, keep calm, carry on and be ready for change.
With just 75 working days to go before Brexit day, we still have no agreement on what Brexit will be. We stand on the threshold of a huge change to the UK economy and society but we still do not know exactly what form that could take, how fast it could happen and how big a change it may be.