Brexit Quick View: No, No, No, No, No, No, No and No

 In Market and Investment Insights

Paul O’Connor, Head of the UK-based Multi-Asset Team, discusses the ongoing impasse within Parliament as MPs unsuccessfully attempt to narrow down approaches to Brexit.

Key Takeaways

  • The Brexit process remains gridlocked after none of the eight withdrawal deals presented to Parliament could muster a majority vote yesterday.
  • We believe Prime Minister Theresa May could try a third time to get support for her Brexit plan, but the prospects are not encouraging.
  • With the clock ticking toward the April 12 deadline for a “no deal” Brexit, a general election seems to be a growing possibility.

Sixteen different potential approaches to Brexit were presented to British members of Parliament (MPs) this week, eight were voted on yesterday – none received majority support. The Brexit process remains gridlocked.

Advocates of softer forms of Brexit might take encouragement from the fact that the two most popular solutions were ones involving the UK remaining in a permanent customs union with the European Union (EU) and another proposing a second referendum on the withdrawal deal. Still, these options did have more votes against them than in favor, and it remains the case that a wide range of outcomes are still plausible, including the hardest “no deal” Brexit, Prime Minister Theresa May’s proposed plan, softer versions of Brexit or even Brexit being revoked.

In terms of parliamentary procedure, the plan from here is for a shorter list of yesterday’s options to be presented to MPs again on Monday, probably with a new voting mechanism, in a renewed effort to establish majority support for one option.

Come on, Arlene

Before then, there is a good chance that Ms. May will try one more time to get support for her Brexit plan, which has already been rejected twice by Parliament. The prospects here are not encouraging given that Northern Ireland’s Democratic Unionist Party (DUP), led by Arlene Foster and, in Westminster, by deputy leader Nigel Dodds, remains opposed to the deal in its current form and the prime minister has limited scope to amend it. Parliamentary arithmetic suggests that Ms. May’s deal has little chance of being passed without the support of the DUP. Even the prime minister’s promise made yesterday to quit if her Brexit plan was voted through was not enough to shift the DUP position.

The clock is ticking and the pressure is building. If Parliament cannot establish support for either Ms. May’s plan or one of the other Brexit options in the days ahead, then the UK will need to request an extended delay to the Brexit process to avoid the alternative “no deal” Brexit on April 12. Before granting a longer extension, the EU is likely to demand that the UK identify some way of breaking the deadlock. A general election is a growing possibility here, although it is far from obvious why this would be an effective solution given how polarized and entrenched political opinion on Brexit is in the UK. As the eight votes showed last night, it is not hard to get agreement on rejecting options for Brexit but establishing consensus for a way forward remains elusive.

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C-0319-23306 03-30-20

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