E Europe

No-Deal Remains Certain, Despite Vote

For anyone who has watched Monty Python, the events of the last two nights strike a worrying resemblance to the “Dead Parrot Sketch”. Indeed, the Prime Minister’s deal is dead, is no more, has ceased to be and is bereft of life. Mrs May, in fact, is possibly a soon to be ex-PM. However, what does this mean for the prospects of a no-deal, and was tonight’s vote on such an outcome meaningless?

Events over the last 24 have seen both increased uncertainty whilst simultaneously reducing uncertainty. After the widely-expected defeat of her deal last night, Mrs May returned to the Commons this evening holding a series of votes on the possibility of no-deal. 

A so-called no-deal is the default legal position, where the U.K. leaves the EU in 17 days time without any negotiated trade arrangements, reverting to World Trade Organisation rules. This is widely suggested to be the worst situation possible, with the Confederation of British Industry (CBI) this morning, warning of the dangers to the economy if we leave in this way. 

The Prime Minister had previously ruled out ruling out a no-deal, arguing that this was a negotiating position. Indeed, she had argued that ‘no deal was better than a bad deal’. However, after the last 24 hours, it is claimed that neither looks likely, at least before Brexit day, 29th March. Her deal has been roundly rejected twice, with unprecedented majorities that for previous Prime Minister’s would hasten their departure from No. 10. 

So, what happens next?

Whilst today the prospect of a ‘no deal’ has been rejected, though, by slender-than-thought majorities, this does not mean that no-deal is now impossible. Indeed, arguably, this prospect is still real - and remains the legal default should a deadlock be reached.

Primarily, MPs will now vote on whether or not to extend Article 50 - the EU Treaty mechanism that makes the U.K.’s departure possible. It is argued by those calling for such an extension that currently the U.K. simply has no time to put in place new trade arrangements in time for March 29th, an issue particularly acute now the PMs deal has been rejected twice. Indeed, this was the implicit suggestion made by Chancellor Phillip Hammond earlier today, finishing his Spring Statement with a renewed call for consensus in Parliament over a Brexit deal. 

If Parliament votes against this extension, then we head for deadlock - which could result in a no-deal, which remains a default position. This was a sentiment made clear by the EU this evening and confirmed by the PM herself who argued that the only definitive way to avert a no-deal is backing her deal. 

However, if Parliament votes for an extension, it will mean two things - neither of which reduce the likelihood of a no-deal. Firstly, the government will have lost total control of the process, with Parliament stepping up to take charge. This was shown this evening with an unprecedented breakdown of Collective Cabinet Responsibility - with Cabinet members voting out of line with the PM. Secondly, most worryingly, this vote will not automatically grant such an extension. Indeed, it would be conditional upon the other EU leaders to agree - and they may simply refuse. If this is the case, and it is likely, then U.K. will head back to deadlock, where a no-deal remains the legal default (unless a third meaningful vote on the deal is held and won). 

 

If the EU says yes, and allows an extension, Brexit could be delayed for a short period. Now is a complex issue as well - with the length of such an extension complicated by looming EU elections. With this in mind, they may reject a short extension, demand a longer one, and require the U.K. to field candidates at the Euro Elections. In this scenario, once again, MPs go back to Parliament and vote on a longer extension. If this rejected, then the U.K. heads back to the default legal position - a ‘no-deal’. 

 

As such, with 17 days left until the U.K. is supposed to leave, uncertainty remains rife. Whilst the vote tonight was supposed to evidence Parliament taking back control and rejecting a no-deal, arguably all it does is demonstrate the strength of opposition to such an outcome. Under most scenarios going forward however, this still remains a very real prospect unless either Mrs May can get her deal through, or the EU agrees to an extension. Both seem very unlikely.

 

Harold Wilson once said that a week is a long time in politics; it has been a long week, and we still have two days left.