The EU-27 member states have been very carefully observing the UK domestic political manoeuvering and posturing this year. The predominant view in the EU-27 is that a managed “deal” scenario is far more preferable to a potentially chaotic “no-deal”. At the same time, precautions have been taken to prepare for a “no-deal” scenario. The EU-27 are not willing to renegotiate the Withdrawal Agreement for fear of neverending negotiations with the UK. They have instead pointed to further clarifications and changes to the Political Declaration.
The mood in the Conservative Party is bleak. Many of the political challenges with Brexit can be traced back to the 2017 election. Prime Minister Theresa May lost her majority and was only able to retain power by making a deal with the Democratic Unionist Party (DUP) from Northern Ireland.
The arithmetic in Parliament is such that if even a small number of Conservative members of Parliament (MPs) defy their own government, then (alongside the opposition) they can block any progress on almost any matter. For this reason, those at more extreme wings of the Conservative Party, whether for a hard Brexit and or for no Brexit at all, have been able to stall all progress.
Procedurally, the UK has three options:
- Ratify the Withdrawal Agreement (with possible accompanying changes to the Political Declaration on the future relationship with the EU) before 22 May, and cancel participation in the European Parliament elections
- Ratify the Withdrawal Agreement (with possible accompanying changes to the Political Declaration on the future relationship with the EU) before 30 June, and ensure that when the new European Parliament session opens on 2 July, there are no UK members of the European Parliament (MEPs)
- Take longer over the process, accepting that the UK will elect MEPs who will take their seats in the European Parliament, and run toward the 31 October deadline agreed with the European Council
The only realistic route to either of the first two outcomes lies in the talks between the government and the Labour Party (Labour). Like the government, Labour can accept the Withdrawal Agreement – and the debate between them is over the future relationship and how any agreement would bind a (potentially more pro-Brexit) successor to the Prime Minister.
Lord, what fools these mortals be – Shakespeare, Midsummer Night’s Dream
Last Friday should have been the day the UK left the EU. Instead the Westminster Parliament, in a rare Friday sitting, rejected the Withdrawal Agreement component of the Prime Minister’s Brexit deal by a substantial majority.
What has happened?
- Parliament has imposed “indicative votes” on possible Brexit outcomes on a reluctant Government, but then failed to produce a majority in favour of any outcome
- The Prime Minister has played her last card in trying to get her deal across the line, by saying she would resign when it was approved, but Parliament has again refused
- The EU extension of Article 50 to 22 May has formally lapsed, and the default is extension to 12 April, then no deal Brexit unless the UK has come up with a credible alternative plan
- The Prime Minister may have one last try to get her deal approved, but unless the Government can get the Northern Ireland Democratic Unionist Party (DUP) to support it, this looks unlikely to succeed
- Parliament will try again on 1st April (colloquially known as April Fool’s Day) to establish which alternative option could command majority support
- If both fail, the PM’s last big decision will be whether push through to a “no deal” Brexit on 12 April (against the now well established will of Parliament), or to accept an alternative Parliament supports and seek a short extension with re-negotiation of the Political Declaration on the future relationship, or to seek a much longer extension of the Article 50 process.
What does it all mean? Continue Reading
- Government strategy thrown into disarray by Speaker’s ruling that Parliament cannot vote on the May withdrawal deal again
- The threat of no deal Brexit on 29 March has been reduced, but not entirely removed
- The threat of no deal Brexit at some point in the future is still there, but remains small
- Brexit will almost certainly be delayed, at least until May / June, but more likely for longer
- Longer delay would be likely to lead to a “softer” Brexit with closer alignment to the EU
- Determining the future EU-UK trade relationship remains heavily dependent on arrangements over the Irish border
- These will form the baseline for all other UK trade relationships, including the UK-US FTA
“Confusion now hath made his masterpiece” Shakespeare: Macbeth Act II, Scene 3
Where are we now?
The UK’s progress towards leaving the European Union has been a tortuous and turbulent affair. It has been marked by Prime Minister Theresa May’s Government suffering repeated heavy defeats in Parliament, which would normally have led to a change of policy if not of Government, but carrying on with its Brexit stance unchanged. So you could be forgiven for assuming that a series of votes initiated by backbenchers at the end of February in which the Government suffered no defeats would also signal no change. Not so. Even more paradoxical, the significant change to the Government’s approach at the end of February may make the outcome the Government has been aiming for all along a little more likely.
What happened? In mid-February, the Government headed off a serious push to give Parliament more influence over the process through an amendment tabled by Labour’s Yvette Cooper, by promising more opportunities to vote at the end of the month. Amid rumblings of discontent among the hitherto loyal Brexit Delivery Group (100+ Leave and Remain supporting Conservative MPs who have supported the PM throughout) and the threat of mass resignations of Ministers, at the end of February the PM effectively adopted the Cooper amendment as her own policy, which led Cooper to propose a further amendment designed to bind the PM to stick to her commitment – this passed with a very comfortable majority, though around 110 Conservatives failed to support it (most abstained, 22 voted against).
Brexit is scheduled to become effective at the end of 29 March 2019 and will take place either with a Withdrawal Agreement or without one having been entered into between the UK and the EU-27. At this point in time it is possible that the Article 50 TEU notice is withdrawn by the UK Government. Whether the Brexit Date 29 March 2019 is postponed upon application of the UK and agreed with the unanimous consent of the other 27 Member States is still undecided.
Upon Brexit becoming effective the UK will cease to be party to the existing Free Trade Agreements and Association Agreements the EU currently has entered into with a multitude of countries and regional free trade zones around the world in the last decades. The UK is currently striving to enter into its own binding agreements with such other countries to come into force on 30 March 2019 but so far only continuity agreements with Switzerland and a number of smaller UK trading partners have been inked.
There is no difference between a “Deal” and a “No Deal” Scenario in relation to the termination of the existing Free Trade Agreement and Association Agreements on 29 March 2019. Even if the UK House of Commons should change its mind and ratify the Withdrawal Agreement, and even if the Transition Period until 31 December 2020 contemplated in the Withdrawal Agreement under Articles 126 and 127 thereof would then come into force, such Transition Period only applies in the relationship between the UK and the EU-27, but does not bind any other country around the world without their express consent.
With continuing uncertainty, there is still a lack of clarity on what the final Brexit arrangements will look like. Many companies have been planning for the implications of Brexit for some time, whereas some still need to consider how Brexit may affect their operations. Both the UK government and the EU are encouraging businesses to prepare for the possibility of a no-deal Brexit. Regardless of size, plans need to be put in place so that businesses can quickly react to whatever the final Brexit deal looks like.
As a result, we have put together a Brexit Readiness Guide which is intended to help businesses navigate the continuing uncertainty and possibility of “no deal”, along with a summary of the core services we provide to help you and your business prepare for the ultimate outcome.
Over the period since the rejection of the Withdrawal Agreement, the Prime Minister’s tactic has been to try to bring the pro-Brexit wing of the Conservative Party, and the Northern Ireland Democratic Unionists, back on side. No.10 appear to have been successful in whittling the pro-Brexit wing’s nominal resistance to the Withdrawal Agreement (which was very wide ranging at the time of the vote on 15th Jan) down to just the Northern Ireland backstop – the failsafe mechanism in the Withdrawal Agreement to ensure that there will be no hard border on the island of Ireland, but which the Pro-Brexit wing fear is a trap to keep the UK permanently in customs and regulatory alignment with the EU. Until yesterday morning, No.10 hoped to achieve this without attempting to renegotiate the Withdrawal Agreement, something the EU has been adamant is not on the cards. But No.10’s aim for a legally binding side agreement looked unlikely to bring the Brexiteers on side. So on Tuesday the PM announced that she was willing to go back to the EU and to seek changes to the Withdrawal Agreement. This – some would say desperate – volte face by the Prime Minister is very significant background to yesterday’s votes in Parliament.
EU citizens and their family members may now apply under the EU Settlement Scheme as part of a public test phase, running from 21 January 2019.
Register now for our Brexit Immigration webinar on EU Settlement and the White Paper at 12.30pm on Thursday 24 January for practical guidance on how to support your affected employees through the application process.