The UK will have a new Prime Minister on 24 July; 99 days before Brexit day. Boris Johnson is odds on favourite. He will start with the same cards that were dealt his predecessor, Theresa May. So how will he gamble? 

There are two things that Boris Johnson has consistently and personally said during the Conservative leadership campaign. 

First, the UK will leave the EU on 31 October, deal or no deal. And second, there will be an election soon (and he is the man to win it for the Conservative party). 

These are two statements that may not be poker player bluff. There is a political logic behind both. Business would do well to heed these:  prepare for a no-deal Brexit on 31 October and expect a general election this autumn.

Last week I attended a talk by the esteemed pollster Sir John Curtice, Professor of Politics at the University of Strathclyde and Senior Research Fellow at the National Centre for Social Research (also star of the BBC’s election night coverage) which highlighted the political logic behind this.

First, the electorate is increasingly polarised between ‘no Brexit’ and ‘no deal’. As Sir John Curtice said, “do not underestimate the popularity of leaving without a deal amongst leave voters”. The compromise positions of a softer Brexit are popular with few voters.

As a result, since April, polling has shown that those parties with ambiguous positions on Brexit (the Conservatives and Labour) have haemorrhaged support to the unambiguous ‘leave’ and ‘remain’ parties (the Brexit party and Liberal Democrats). This chart illustrates it very clearly:


source: https://en.wikipedia.org/wiki/Opinion_polling_for_the_next_United_Kingdom_general_election#Graphical_summary


The only way for the main political parties to recover votes is to take an unequivocal ‘leave without delay’ or ‘remain’ position. This is why the next Conservative leader will be committed to leaving on 31 October ‘deal or no deal’. John Curtice referred to polling that shows that 60% of Brexit party supporters say they would be more likely to vote Conservative if Boris Johnson is the leader.  

From day 1, expect the Prime Minister to ramp up no-deal preparations. Boris Johnson is likely to only appoint Ministers who are comfortable with the possibility a no-deal Brexit. 

Deploying this harder line, the new Prime Minister will have a one-shot opportunity in September to negotiate with European Union leaders to secure any changes to the Brexit deal and then sell his approach to MPs. If the EU sticks to its guns (as it has confirmed again and again), then we can expect no-deal. There is a small chance that some concessions (a longer transition period or time limit on the Irish backstop) could be agreed by the EU and then by Parliament.  But there is a small window to achieve this and little wriggle room for anyone.

This makes a no-deal Brexit more likely than ever: Ministers and MPs, the Bank of England, the Institute of Directors and the Dutch and Irish Prime Ministers have all issued warnings in recent weeks.

A group of MPs, soon to be led by Philip Hammond, have expressed a determination to stop no-deal Brexit. But bear in mind they will have few opportunities to do so. MPs break up for their summer holidays the day after the new Prime Minister takes office; they are then back at work for four weeks at most before Brexit day (and for just one week between 25 July and 8 October). 

Electoral logic was also behind last week’s decision by the Labour Party to edge towards becoming a ‘remainer’ party. They committed to a second referendum and backing remain in response to any deal (or no-deal) proposed by a Conservative government. But Labour kept the option of backing Brexit if they were in a position to negotiate their own Labour deal with Brussels. Labour is still not an unequivocal ‘remain party’.  Unless this changes, we can expect them to continue to lose votes to other parties.

This poses an interesting scenario for Boris Johnson over the summer: opposition from his own MPs; support from Brexit party voters; and Labour has yet to hold its party conference and agree to a more pro-remain position. Given these, might September or October not be the best time to gamble on holding an election? That is one reason why politicians and commentators are increasingly talking about an autumn election. If there was one, what might the outcome look like?

Recent polling is very volatile, with four parties (Conservative, Labour, Brexit Party and Liberal Democrats) all hovering around 20%. Such a four-way split is unprecedented in UK politics. Given the first-past-the-post system, it makes any election result highly unpredictable (a split between Conservative and Brexit party could enable Labour to win marginal seats on a low percentage; and equally a Labour/ Lib Dem split could enable the Conservatives to win marginal seats). 

Electoral Calculus, a political forecasting website, currently predicts the following probabilities of outcomes of an election:

  • Some form of Labour government (majority or coalition with Lib Dems or SNP): 37%
  • Coalition of Conservatives and Brexit party:  20%
  • Labour majority: 16%
  • No overall control:  15%
  • Conservative majority: 11%

Any of these is possible. These could create very different business environments, as well as different Brexit outcomes: with significant differences in spending, tax, trade policy and labour market regulation.

Up until now many businesses have been planning for no deal or an election; both could be possible this autumn. Business needs to understand politics and be prepared for political outcomes and policies that may have been previously unimaginable.

  • Prepare for no-deal.
  • Expect significant political change – which will redraw the UK business environment.