Tonight the Brexit Withdrawal Agreement was rejected by the UK Parliament for a second time. 

UK law and the EU Article 50 process continue to determine that the UK will leave the EU on 29 March – and unless anything changes that will be without a deal.

We now face a turbulent few days in politics, where no one knows how this chapter of Brexit will turn out. We do at least have a clear process for the next two days: the Prime Minister confirmed the sequence of votes she agreed two weeks ago. 

Here’s our decision tree, updated in the light of tonight’s vote:

Tomorrow there will be a free vote on whether MPs want a No Deal Brexit on 29 March.

In advance of that we expect the government to publish two key parts of their No Deal planning, which they have been keeping secret until now:

  • The UK government’s Northern  Ireland border plan for No Deal. The key question is whether the UK  would impose any border controls between Ireland and Northern Ireland; the probable answer is ‘no’.  This will be critical for people and organisations in Ireland and Northern Ireland and any businesses with cross-border supply chains.
  • The UK’s external tariff schedule in the event of No Deal. This is important for all UK producers  and importers: does the UK mirror EU external tariffs to protect UK producers or slash tariffs to benefit UK consumers? We expect a mix:  tariffs to protect UK farmers and car manufacturers but zero tariffs for many imported goods. The devil will be in the detail.

If, as expected, MPs reject the idea of No Deal then we move to a third vote on Thursday on extending Article 50 to delay Brexit (for how long we don’t know) to allow for a solution to be found. 

If parliament supports an extension, then we still need the EU to agree (unanimously) to that request; there could also be some backwards and forwards negotiation on the terms which may jeopardise any agreement to extend.  

What does tonight’s vote mean? 

  • We are unlikely to know for sure what will happen on 29 March until 21 March at earliest.
  • There is an increased possibility of a delay to Brexit, but any extension will be on the EU’s terms.
  • The chances of No Deal Brexit have significantly increased.

With 17 days to go, the proposed deal has been killed off. A no-deal Brexit is the default; it is set in law unless parliament and the EU agree otherwise. A request for an extension to the negotiation period (extending article 50), could still lead to No Deal: whether on 29 March in response to terms imposed by the EU or by the end of June at the end of a short extension.

What should businesses do?

Develop and action a No Deal contingency plan.  We have put together a ‘No-deal Essentials’ guide to help you plan for No Deal - highlighting six things to look at between now and 29 March to ensure business continuity, compliance and cost management. 

Don’t delay!