This week the Prime Minister has lost a few battles against what has been dubbed the ‘rebel alliance’ of MPs in the Brexit civil war. But a no-deal Brexit is not off the table.
Events of this week may have made no-deal Brexit on 31 October less likely, but a no-deal Brexit remains a strong possibility. Businesses and organisations with Brexit plans continue to prepare for a no-deal. Events of this week have also made an election by Christmas a dead cert.
Here is why a no-Deal Brexit overall is currently a 50% probability in my book, and how different election timetables could affect this.
- Organisations should continue to plan for a no-deal Brexit.
- The probability of a no-deal Brexit is determined by the precise timing of an election (and then the outcome of that election).
- If no-deal is averted on 31 October, the result of an election shortly after that will largely determine whether or not we then head for a no-deal Brexit in January.
Here’s the longer read:
This week Boris Johnson lost his majority in the House of Commons; he ‘purged’ 21 MPs in his party for trying to legislate against no-deal, and he now heads a minority government. The Government is currently being held in check by Parliament to thwart a no-deal Brexit on 31 October: MPs voted in favour of a bill (now law) that would require the Government to ask the EU for a delay to Brexit if a deal has not been agreed by 19 October. This makes 19 October a critical date.
As long as the current parliament is sitting, MPs can probably ensure that this new law is actioned and the UK does request an extension to article 50 – which would delay Brexit and thereby avert a no-deal on 31 October, provided EU leaders unanimously agree to it and Parliament then accepts any terms it sets. But the incumbent Prime Minister also has a lot of power under the UK political system and if MPs are not sitting (e.g. if parliament is dissolved for an election campaign) then a determined Prime Minister could still pursue a no-deal Brexit.
So the timing of any election is critical in weighing up the chances of a no-deal Brexit - and it is the timing of the 5 week (or more) dissolution of parliament for an election (i.e. the election campaign period) that counts more than the actual day of the election.
Furthermore, the outcome of the election will also determine whether we have a no-deal Brexit or not: if Boris Johnson’s ‘purged’ Conservatives secured a majority after the next election they would be free to pursue a no-deal Brexit if they could not agree significant concessions from the EU (and they might be more compelled to pursue no-deal if they need to depend upon Brexit Party MPs for a majority). As things stand, a Labour government or coalition would offer a second referendum. [N.B. I’ll look at the wider (non-Brexit) implications for business of these electoral outcomes in a future blog – Brexit or no Brexit they will lead to significant disruption of the established business environment!]
So, the no deal/ election equation is:
- If parliament is not sitting, the chance of a no-deal increases.
- And if there is an election, a no-deal increases in probability in proportion to the likelihood of a Conservative-Brexit Party coalition and (to a slightly lesser extent) a Conservative party majority [techie point: this may possibly be a bell curve and start to decline in probability if the Conservatives won a very big majority as it is possible that the Prime Minister would be more able to secure a majority for a deal in such circumstances - there are lots of complex considerations to assess around this which I won’t bore you with for now].
As things stand, Parliament is prorogued until 14 October (unless overturned in the courts). There are probably an infinite number of scenarios of what may happen in the coming month or two. Here is a run though of the main ones and what the implication is for no-deal probability.
1. The Prime Minister puts an amended Brexit deal to Parliament before 19 October.
Some tweaks to the EU withdrawal agreement (Theresa May's deal) could be agreed with the EU and brought back for a vote by MPs. The chances of MPs approving this may be slim (it will hinge on whether it secure support from enough Labour MPs to outweigh hard Brexit MPs opposed to any deal). If enough votes can be found, then we would avert a no-deal. We would then have an election after leaving on 31 October with a deal. If a deal is not agreed then we face the next scenario.
If not, either manages to fend off rebel MPs and legal challenges for two weeks and leads the UK into a no-deal Brexit or we either face no-deal or In this scenario a determined Prime Minister might decide to circumvent in some way the requirement to ask the EU for a delay to Brexit – without MPs sitting there is little they could immediately do to stop this and legal proceedings might take us beyond 3 October. In this scenario no-deal could be a strong probability.
2. The Prime Minister or an EU leader prompts a no-deal Brexit on 31 October
There has been plentiful media speculation about the various rouses the government might use to provoke a no-deal Brexit. A determined Prime Minister could provoke the EU into refusing to agree to an extension to article 50 or one or more EU leaders could decide to vote against an extension. Either way, a no-deal Brexit would happen on 31 October.
3. An interim Prime Minister requests an extension to article 50 and this is agreed by the EU.
Boris Johnson said he would die in a ditch before requesting an extension. Under this scenario, if he did not request an extension by 19 October either he might resign, or he might lose a vote of confidence and be replaced by a temporary Prime Minister who would request an extension to article 50 and then call an election. This scenario has a good chance of averting no-deal on 31 October - provided every EU leader agrees to the request. No-deal is still possible if the EU attach conditions which MPs and the government reject. This also still allows for no-deal at a later date after an election...
4. Parliament is dissolved after 31 October – which would suggest an election around 9 December at earliest.
This is a variant on version 3 above. The probability of no-deal after this election depends upon who wins the election. If we have another deadlocked parliament like the one that was elected in 2017 then we can expect further continued uncertainty!
We can’t predict what will happen.
Events will unfold over the coming weeks, hotting up when MPs return to Parliament on 14 October.
We can be confident there will be an election at some point before Christmas.
The timing of the election will determine whether or not no-deal is avoided on 31 October. If it is averted on 31 October, a no-deal Brexit in December or January remains a very possible outcome of the subsequent election.
Organizations should continue to plan for a no-deal Brexit. The probability of a no-deal is determined by the precise timing of an election (and then the outcome of that election). If no-deal is averted on 31 October, who wins the election after that will largely determine whether or not we are heading for a no-deal Brexit by January.