McLARTY FIRST TAKE: Brexit – The Endgame?
October 21, 2019
The Latest from Parliament
As always, Brexit continues to be unpredictable and incredibly complicated – with only 11 days to go before October 31st, there is still no clear path forward. As we laid out in our update at the end of last week, Prime Minister Boris Johnson hoped to gain Parliamentary approval of his new deal with the European Union at a special sitting of the House of Commons on Saturday. Instead, a cross-party coalition of MPs voted 322 to 306 in favor of the Letwin Amendment, which requires the government to secure Parliamentary approval of extensive implementing legislation before the overall deal can be accepted. The government then decided not to present the deal for a so-called “meaningful vote.” On Saturday evening, Johnson sent a letter requesting an extension of the October 31st deadline from the EU, as required by earlier Parliamentary measures, but then sent two other letters explaining that he really did not want such an extension!
Today, Monday, October 21, the government sought to present the overall deal for a vote again as a way of regaining momentum. This has been disallowed by Speaker John Bercow. Now the Johnson government plans to present implementing legislation – the Withdrawal Agreement Bill, or WAB – to the Commons immediately. That bill could be approved, but it is also very possible that MPs will seek to attach amendments requiring hearings and other examinations of the WAB. Legislation implementing international treaties often takes several weeks to pass the Commons, and this is a very complicated treaty with unusual and controversial provisions. If such amendments pass, we can expect further delay before there is a resolution.
In the meantime, the EU has said it will wait to see what the UK government does before deciding on any extension beyond October 31. In case the UK bill moves forward, the EU is taking steps to present an approved treaty to the European Parliament for ratification before October 31. But if the British process hits yet another snag – such as extensive Parliamentary examination of the WAB – the EU is very likely to grant an extension.
What does this mean for our future scenarios?
First, the likelihood of a “no deal” Brexit has receded considerably. Parliament has made clear the unacceptability of this option and is holding the government to that line.
Second, the debate on Saturday provided many indications that the current deal is the most likely one. It is possible that an extensive review will reveal many undesirable features, but there is also a recognition that no better deal is available. And “Brexhaustion” has definitely set in, with a desire to “get on with it” in many quarters.
So, our betting is on two scenarios:
The current deal will be accepted by the Commons and Britain will leave the EU sometime before the end of 2019. It will enter a transition period during which all EU rules will continue to apply to the whole of the UK through at least December 2020, while the nature of the future relationship is negotiated with the EU.
The extensive review of the WAB creates a political stalemate and passage is impossible. Boris Johnson will have little choice then but to go for a general election, which will essentially serve as a second referendum.
Of course, we have made such predictions before! But in this case, the business community seems able to breathe a little easier, with the UK now much less likely to crash out of the EU without a deal.
Copyright © 2019 McLarty Associates. All rights reserved.