Quick view: May has lost control of the Brexit process

13/03/2019

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​Simon Ward, Economic Adviser, believes that Prime Minister May has lost control of the Brexit process, a development that has increased the risk of a no-deal Brexit, despite parliamentary opposition to such an outcome.

Following yesterday’s second heavy defeat for her European Union (EU) withdrawal agreement, Prime Minister May has lost control of the Brexit process. This has increased the risk of a no-deal Brexit, despite parliamentary opposition to such an outcome.

There are three ways to avoid a no-deal Brexit. The first is for the hardliners of the Conservative European Research Group (ERG) and Northern Irish Democratic Unionist Party (DUP) to abandon their opposition to May’s deal. They won’t. The ERG hardliners desire no deal. The core members have fought for a complete break from the EU for 30 years and have never compromised with the party leadership. They would prefer Brexit to go down and to cry betrayal rather than accept what they view as a watered-down outcome.

The second possibility is that a House of Commons majority coalesces around a new agreement involving a softer form of Brexit, in which the UK stays in the customs union and single market. Such an initiative, however, requires a government to push it forward. A Conservative-led administration attempting to do so would split the party irretrievably and lose its majority. It is not even clear that a majority exists across the Commons for a soft Brexit – MPs representing leave constituencies could find it impossible to support an agreement allowing unlimited EU immigration, which was a key issue in the referendum campaign.

The third possibility is a long extension to Article 50 to allow time for a new consensus to form, possibly involving another referendum with several options for voters to rank. Again, many MPs would regard this as failing to respect the original referendum result and would oppose it. More importantly, the EU might not accede. A long extension would require the UK to participate in European Parliament (EP) elections in May, possibly resulting in an influx of troublesome UK MEPs from a new Brexit party. It would also allow the UK more time to prepare for a no-deal exit, thereby reducing the EU’s leverage in future trade talks. Many EU businesses, moreover, have already implemented contingency plans for no deal and might prefer this to go ahead this year rather than suffer a further long period of debilitating uncertainty.

A reasonable central scenario is that the UK requests and is granted an extension of Article 50 to June, avoiding a need for UK participation in the EP elections. May uses this extra time to heap pressure on the ERG / DUP to accede to her deal but with no success. Parliamentary attempts to forge an alternative deal, meanwhile, run aground. Preparations continue for a no-deal Brexit on both sides of the channel, with growing political and public awareness that such an outcome is likely.

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