Tonight, Parliament is a swirl of intrigue and plotting. A simple vote on whether or not MPs wanted to rule out a no-deal Brexit led to a further defeat for the government and ministerial resignations. With sixteen days to go before Brexit day, we still have no idea what will happen on 29 March and how Brexit will proceed. As part of today’s Spring Statement by the Chancellor, the Office for Budget Responsibility stated in its economic forecast that “we still have no meaningful basis for predicting the post-Brexit trading relationship”. As one of my favourite clients is fond of saying, let’s stick to what we know for sure about Brexit at this point. So…
- Last night Theresa May’s withdrawal agreement was defeated heavily in Parliament.
- Today MPs voted to express their view that a no-deal Brexit (hard Brexit, with no transition) should be avoided under all circumstances.
- In line with the process set out by Theresa May two weeks ago, this means that tomorrow MPs vote on extending article 50, to delay Brexit. We are now at the third stage of our decision tree:
The motion for tomorrow’s vote says that the Government will seek an extension to article 50. It goes on to say that:
- if parliament votes in favour of Theresa May’s Withdrawal Agreement (the one that has already been heavily defeated twice), then the government will request a short extension until 30 June.
- if parliament fails to endorse Theresa May’s deal by next Wednesday (20 march), then a much longer extension will be needed, and the UK will have to take part in the European parliament elections in May.
This government motion may be amended by MPs tomorrow.
Earlier today a number of Ministers were intimating that Parliament would hold a series of ‘indicative votes’ next week. In the words of one cabinet minister: “parliamentary process will get underway to establish what kind of deal there is a majority for. It is the responsibility of MPs to identify what they can support…”. This was not quite what the Prime Minister said later this evening.
We shall wait and see what happens in the coming days. Theresa May’s deal has been dead and buried twice but could yet be resuscitated and voted through on the third attempt.
For now, the key points for business are:
It will go to the wire and as things stand pretty much anything could happen: We are unlikely to know the outcome of UK political deliberations until next Wednesday (20 March) and then we have at least a couple of days of EU negotiations (there is a summit of EU leaders on 21-22 March). We may have to wait until 25 March before we have any clarity. Four days before Brexit Day.
Continue to get ready for a no-deal Brexit: Today Michel Barnier told the European parliament that the EU is ready for No Deal and that this is now more likely. This morning the UK Government published a core plank of its No Deal preparations: a new tariff regime for UK imports in event of No Deal. My colleague Tom sets out here what this would mean for business.
No Deal remains the default. The vote by MPs tonight does not take it off the table. Just as the UK and EU government are ramping up no-deal preparations, all organisations need to be ready too. Businesses should not take their foot off no-deal preparation.
We are approaching the end of the beginning not the beginning of the end:
One final thought from the Office of Budget Responsibility’s Spring Statement economic forecasts today: “the smoothness, or otherwise, of the UK’s withdrawal from the EU is but one step in the Brexit process, as negotiations on the terms of the UK’s future relationship with the EU have yet to begin in earnest. So many decisions remain to be taken that will help determine the eventual impact of Brexit on the economy and public finances.” To put it another way, we are approaching the season finale for Brexit – but this is Season One of a six series box set. And like all good TV drama, we will have no idea how the season ends until the last minute.
No Deal remains the default. The vote by MPs tonight does not take it off the table. Just as the UK and EU government are ramping up no-deal preparations, all organisations need to be ready too.