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BREXIT: COUNTDOWN TO THE CRUNCH!

10/01/2019

- By FBC Manby Bowdler’s Peter Wilding, Corporate Solicitor and Brexit Adviser 

So what’s going to happen?

Brexit reaches its Parliamentary endgame on Tuesday with the vote on the Prime Minister’s painstakingly crafted deal. If successful, its main effect is to kick the business uncertainty can down the road until New Year’s Eve 2020 by keeping the single market open. Nothing commercially will change. Companies up and down the land would breathe a sigh of relief.

But literally no-one in Parliament believes it will pass. If it fails by fewer than 100 votes, Theresa May might consider the defeat a victory, challenge Parliamentary convention and bring it back to Parliament at a later date.   Any worse and the deal will have more nails in it than Frankenstein’s coffin. It will be deader than dead. Cue a constitutional crisis.

Now begins a game of three bluffs, three solutions and three outcomes.

Bluff one: Will the EU cave to support the deal? No. What Theresa May wants is for the EU to give a legal guarantee that the devilish Northern Ireland backstop can either end on a certain date or be terminated by the UK government alone. The EU has made it clear that the deal agreed last month is now fixed in stone and cannot be changed. If they did, EU unity would split. Any assurances they may give would be non-binding and unlikely to persuade MPs to back the deal.

Bluff two: Will Labour cave and support May’s Brexit? No. Labour wants the UK to stay permanently in the EU customs union. This is only temporary in the Withdrawal Agreement. But as they also want to destroy the Government and force a general election via a no confidence vote there is no chance the opposition will support the deal. If they did, Labour would split.

Bluff three: Will Conservative Brexiters cave? No. Many Conservatives baulk at the prospect of facing years of accepting EU rules with no say over them.  117 of them voted to depose their party leader last month and over 100 have publicly condemned the deal. About 50 actively want no-deal and 50 others hate the prospective vassalage to the EU. All fear for their party and media reputations should they back down. If they did, the Conservatives would split.

So what next if bluffs one, two and three are called?

Solution one: Will the Government cave and go for no deal? Defeat will force Theresa May to make a choice she has framed as either no deal or no Brexit and has so far avoided. She can sit tight, wind the clock down and allow the UK to fall out of the EU on March 29th by automatic operation of law. This would win over half her party, more of her Tory base but will doubtless ultimately force 20 or more of her MPs to abandon the whip and into no-confidence territory potentially forcing a general election.

It won’t work.

Solution two: Will the Government cave and try to amend the deal? May cannot re-present the deal as it is because once it is defeated convention dictates that the same question cannot be put in the same session. So she may try to buy more time, beg Brussels for token changes and get the Commons to vote on her “lipstick on a pig” deal at the last moment hoping that MPs ultimately fold. It won’t be pretty but it might work.

Solution three: Will the Government cave and try for a compromise? She could – given that she now has only three Commons days to come up with Plan B – say that the (non-binding) political declaration will now offer only a Norway-style deal. This compromise could unite Labour and Conservative moderates around a plan which would have the UK staying in the single market and in the customs union permanently.  But, crucially, it abandons all her, and, importantly, Jeremy Corbyn’s red lines on bringing free movement of people to an end. Both Conservatives and Labour could split. But if Corbyn gives his party a free vote, Labour could stay united and the Tories would split. It might work. 

If all else fails, will Parliament find a way to stop no deal as catastrophic, the compromise as a worthless Brexit in name only or the new deal as cosmetic? If May is still in power and the government still alive by this stage, then somehow it will be forced to either revoke or extend article 50 and start again. Given that both require the government to do so only if there is a general election or a referendum and not just to buy time, number 10 would by then be a burning building with no exits. 

So we would then have a peacetime crisis with three outcomes:

Outcome One: If this is our 1846 Corn Laws or 1886 Irish Home Rule crisis we will see a seismic political earthquake which will destroy one or both main political parties.

Outcome Two: If this is our 1931 Gold Standard crisis we will see a national government formed.

Outcome Three: If this is our 1903 tariff reform or 1938 appeasement crisis we will see the government stumble through to eventual defeat but with their policy passed but tested to destruction.

Hold on to your hats. Business can only watch and prepare. We, at FBC Manby Bowdler, will be there so that whatever happens as we enter this historic tunnel, you will be there on the other side.

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