Brexit: the route to the UK parliamentary vote on the withdrawal treaty

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In the UK, Brexit developments remain front and centre on investors’ radar, and during the final quarter of 2018, Brexit took some more twists and turns: a draft withdrawal treaty was agreed by the UK and European Union (EU) in mid-November, which was followed by a few cabinet MPs resignations; the “meaningful” vote originally scheduled for December 11th 2018 was postponed; and the Conservative party leadership challenge was finally launched, which Theresa May won and therefore earned a year of immunity.

Draft withdrawal treaty

In mid-November, the UK and EU agreed a draft withdrawal treaty, which runs to 585 pages, and a non-binding political declaration about the future relationship between the EU and the UK.

The key point in the deal was the Irish border backstop. The plan is for the UK and EU to agree a comprehensive trade deal before the last six months of the transition deal, and if that is not possible the transition deal can always be extended to allow a trade deal to be done. Otherwise the backstop has to kick in – at that point the whole of the UK will effectively remain part of a de facto customs union until alternative arrangements can be found for ensuring the absence of a hard border on the island of Ireland. At the same time, under the backstop, there will be a regulatory border between Northern Ireland and the rest of the UK in the Irish Sea. Critically, the decision to exit the backstop cannot be taken unilaterally.

The political declaration speaks of the future steady state for ambitious trade arrangements built on the single customs territory, and a free trade area combining deep regulatory and customs cooperation, underpinned by provisions ensuring a level playing field for open and fair competition. However, the political declaration is not legally binding, and some member states within the EU will need to be convinced that the UK has not been allowed to secure a competitive edge on the EU-27 within the single market.

November 2018: EU summit

After an acrimonious 5 hour cabinet meeting in November, Prime Minister (PM) May was able to win the support of the majority of her Cabinet for her deal, but the support was not unanimous. Dominic Raab, who replaced David Davis as Brexit Secretary in July, resigned and argued that the deal “presents a very real threat to the integrity of the United Kingdom”. Secretary of State for Work and Pensions, Esther McVey, who demanded a vote within the Cabinet on the deal, also resigned in protest.

A special EU summit was called for 25 November 2018, in which the withdrawal deal was “finalised and formalised” by the EU, which then supposedly set in motion the parliamentary process on either side of the Channel.

“Meaningful” vote postponed and leadership challenge launched

The UK parliamentary vote on the Brexit agreement was originally scheduled for 11 December 2018. However, on 10 December, PM May had to make a last minute decision to delay the vote to avoid a significant defeat, as PM May was unable to convince enough of the 100 Conservative MPs who said they were against the deal.

A Conservative Party leadership challenge had always been a risk, and PM May’s decision to delay the Brexit vote seemed to be the last straw. After months of speculation, the Conservative Party’s backbench 1922 Committee finally received enough letters to trigger a confidence vote on PM May’s leadership. PM May won the confidence vote by a margin of 200 to 117. While the result of the vote handed her a 12-month immunity, the “victory” came after May confirmed that she will not lead the party into the next election in 2022, and the loss of more than a third of the parliamentary party underscores deep divisions over her leadership and handling of Brexit.

December 2018: negotiations continue

The Prime Minister and her negotiation team then immediately returned to Brussels for the December EU summit to seek new reassurances from Europe over the backstop, in the hope that new concessions from the EU might conceivably win over some sceptics at home. Unfortunately the strategy was not well received by the EU counterparts – the Prime Minister was accused of making “nebulous” requests, the EU leaders were unwilling to reopen the negotiations and instead want the UK to carefully work out a realistic compromise that would have cross-party support from the House of Commons.

The European Court of Justice’s (ECJ) ruling on interpretation of Article 50 added another interesting wrinkle to Brexit. In December, the ECJ confirmed the legal advice given by its advocate general, who said that the UK as a sovereign country could unilaterally revoke Article 50, even at this late stage, and even after the Article 50 originally 2-year period had been extended. The ECJ’s ruling is significant because it means that the UK could prevent a no-deal Brexit from happening should it choose to, and that Article 50 revocation could be used to buy time to hold a second referendum. But of course the UK government has so far ruled out an Article 50 revocation, or even an extension, in order to keep maximum pressure on the MPs to get May’s deal passed.

15 January 2019: UK parliamentary vote

Despite all these dramatic twists and turns on the road to Brexit, nothing much seems to have changed. It remains a monumental task to get the Democratic Unionists, the Remainers and hard-line Brexiteers in the Conservative Party, and moderate Labour MPs to line up behind May’s deal. If anything, resistance appears to have hardened on either side of the debate, with little appetite for compromise.

May’s deal is now scheduled for a vote today on 15 January 2019. But even if May fails (which technically did happen in December when the vote got postponed), the UK does not automatically walk through a no-deal cliff exit. Instead, a variety of political scenarios may arise if May’s withdrawal bill is voted down. First, the campaign for a second referendum which has already been brewing in the background could suddenly gather a much stronger momentum. Second, we know that there is a strong consensus in the Parliament against a cliff-edge Brexit, so the Parliament would likely instruct the Prime Minister to return to the negotiating table. In that case the UK may ask for an Article 50 extension. Third, the Labour Party who has so far been reluctant to throw its support behind a second referendum may change its position at that point in order to secure a general election.

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