Why a vote on „No Deal“-Brexit is becoming more likely and what might happen next

by Christoph Meyer, Professor of European and International Politics at EIS.

Prof. Christoph Meyer

Prof. Christoph Meyer

Speculation about future political decisions is normally best left to journalists, particularly when the future depends on tactical choices of politicians seeking to outthink, outmaneuver and therefore surprise others. We have seen these patterns since the Brexit referendum both within the major parties as well as between them. However, we are now in the situation where the tactical games are no-longer just played at the domestic level, but also in Brussels with the UK’s “friends and partners” (May) or potential “enemies” as the Chancellor called them over the weekend. Moreover, negotiations with the rest of the EU enter a period when the difficult strategic trade-offs can no longer be avoided as non-decision has itself dramatic consequences, namely Britain’s economic, political and legal rupture with the rest of the European Union on March 2019 as the article 50 process comes to its end. Against this context it is useful to think through some of the key scenarios and their likelihood to better prepare ourselves for the significant consequences.

I. A deal is made
The government had hoped that Theresa Mays’ Florence speech would allow quick progress beyond the immediate issues arising from Britain leaving the European Union. Apart from the significant change towards a more EU-friendly tone, the most significant novelty in the Prime Minister’s speech was the sentence “the UK will honour commitments we have made during the period of our membership”. It was a major departure for the UK government both in terms of accepting the principle that financial commitments do exist that need to be honoured to the tune of at least €20bn, but also because it entailed a period within which the UK would be without a say within the EU institutions, but still bound by all the rules, regulations and judgments. Leading backbench Brexiters were clearly unhappy, whilst EU lead negotiator Michel Barnier made some positive noises and apparently recommended to the EU ambassadors somewhat greater flexibility.

It will probably not be enough for three reasons. The first is that the EU-27 are not yet happy with the offer: leading net-contributor countries such as France and Germany, but also others are holding out for more as €20bn is less than a third of what the EU had identified and does not cover, for instance, pensions for British civil servants in EU institutions and credit guarantees. Moreover, the offer appeared to be conditional on the EU granting the UK single market membership for an extended period of “around two years” – an issue that was meant to be discussed only after “dealing with the past” according to the agreed schedule.

Moreover, there has been hardly any progress on the Northern Ireland-Irish border as the EU’s preferred solution of letting Northern Ireland stay in the customs union to prevent physical border checks is unacceptable to the DUP. Furthermore, the EU-27 are conscious that showing premature flexibility would serve as a potentially dangerous precedent and example that will be weaponised by anti-EU parties and movements in some EU member states.

Secondly, the offer made by May was partially undermined by Boris Johnson’s comments before and after the speech, when he set out red-lines that were contradicting parts of what was to be offered and undermined the authority of the Prime Minister. The EU is not sure whether they can trust the current government to deliver on any deal. Europeans follow British media closely and know that Boris Johnson is just one crisis away from either being released from Cabinet discipline or challenging for the leadership of the party and country. Given that his views of the EU are well-known in Brussels and beyond, this would severely undermine the trust that any deal entered into will hold.

Thirdly, the EU senses that government is now very vulnerable to their demands after the general election robbed the Conservative party of its majority in the Commons and reduced rather than substantially increased the number of Brexit-advocates among MPs. Most EU negotiators do not believe the UK will be able to walk away without a deal and have to accept the conditions. Therefore, the EU will only agree to a deal if the government offered more money and came up with some kind of solution for Northern Ireland to stay de-facto within the Customs Union. It would probably also need to agree to a Norway-type scenario or substantially extend the two-year transition period to negotiate a type of Association Agreement a la Ukraine with the EU. This would probably find the support of Labour.

However, this outcome does not appear likely. The government has already signalled that it will not offer any more money without further EU concessions for fear of sparking a backbench rebellion and a leadership contest, nor can it offer any more concessions about Northern Ireland without triggering the DUP to desert the confidence and supply agreement and trigger its fall. It has vilified Labour leader Jeremy Corbyn and will struggle to find an agreement without triggering an internal leadership challenge. Instead there is clamour among the Brexiters and the supporting press to finally talk tough with the EU and get movement by threatening to talk away. This brings us to:

II. No deal is made
Under these circumstances it appears rational for the government to ramp-up preparation and rhetoric for a “no deal-outcome”. The issue is of course whether the Parliament will support such a course of action. Before assessing the probability, it would seem that the government could be prepared for political reasons to force MPs to back “no deal” or face the consequences even if it expected to lose. In this case, it could try to shift the blame to those MPs who voted against for being traitors to the party (Conservatives) or saboteurs of “the will of the people” (Labour and Libdems). They could try to argue that any bad outcome will be their fault rather than the governments hard Brexit approach and their red lines. They will argue that no better deal is possible and that “crashing out” would happen anyway given their claim that the article 50 process is irreversible.

So how likely is the “no-deal” scenario, either as a deliberate outcome or an accident? It seems to me that likelihood of parliament backing such an outcome is slim. The issue is not just that the number of MPs within the current parliament who are remain supporters has grown, but that also that the Labour party has managed to find a minimal consensus around “no deal” being unacceptable under any circumstances. It has also become more likely that there will be sufficient Tory rebels against a no-deal scenario and informal talks about blocking such an outcome are already happening.

The background to these talks is a slow shift in public opinion against Brexit as the economic consequences of the June 2016 are visible in higher inflation and drop in real incomes, a collapse of foreign direct investment by companies (from a £120bn surplus in the first half 2016 to a £25bn deficit), lower growth-rates than any G7 country, and businesses moving jobs elsewhere to prepare for the “cliff-edge” scenario.

Most MPs know that there is no time build the infrastructure and systems that would somewhat mitigate the “no deal” scenario. In any case, new physical infrastructure in Dover would not help much if there is no cooperation with the continental counterparts on the other side of the channel. There would be still be huge delays, disruption and heavy costs. This is not even counting the long-term political costs of the UK in acrimony and without settling its accounts.

What, then, would happen if the government lost such a vote? One option would be the accidental crashing out as there is not enough willingness to change the negotiation stance unless the government falls and there is a general election. Let us assume for the moment that government wanted to carry on despite losing the vote. What would be the options? One option that is publicly not much discussed is the revocation of article 50

Revoking the intention to leave: Several government ministers said they believed that the article 50 notification is irreversible or would at least require the consent of all the EU27. It is obvious why they would make this argument, but the reality is most probably different. Article 50 is silent on whether it can be revoked but most lawyers and indeed EU experts agree that an intention to leave can be changed as long as the UK is still a full member. The UK supreme court made clear that the referendum of June 2016 was not legally binding and parliament remains in full control of the process. It did not rule on the revocability as this was not a contested issue between the two parties to the case. As for the EU’s side, it is highly unlikely that any member state would wish to bring a case to the European Court of Justice to challenge the UK’s right to stay. Even if the ECJ became involved, one only has to look at its rulings over decades that it would not dare to remove the rights of more than 60 million citizens without an explicit legal basis to do so.

Therefore, parliament can revoke article 50 if faced with a no-deal scenario. The question is whether Labour would dare to depart from its previous commitment to respect the result of the 2016 referendum and its rejection of a second referendum. However, if faced with the alternative of watching the UK crashing out, it could well muster the courage to change course. The question is whether parliament would vote for revocation without calling a referendum on it first. This might depend on when such a vote will take place. It is hard to see the EU-27 willing to allow any further extension let alone an early re-application of the UK given the costs that uncertainty has created for its citizens and businesses. A referendum on “no-deal” vs “staying-in” could be organised on different terms than the previous one, for instance, by making it legally binding to settle the issue once and for all.

These predictions may be as wrong as many others have been since June 2016. Perhaps the EU-27 do shift their position to allow discussions about trade or perhaps the government can mobilise a bit more money to bridge the relatively small gap. Perhaps Brexiters will realise that the only chance to “save Brexit” is to compromise on money and single market membership.

However, I believe a vote on “no deal” has become substantially more likely and it is important to think about and prepare for the implications. Under period of stress and heightened emotion states of anger and fear, decision-makers can resort to extreme choices and public opinion can polarise even more with dangerous consequences.

Brexit has entered the phase when timing is running out and painful decisions with long-reaching consequences will need to be taken, some of which will inevitably contradict what has been promised by the leading parties and campaigns. It would be better for citizens in Britain as well as the EU to have clarity earlier to avoid the bad outcomes that decision-making under crisis often brings.

One thought on “Why a vote on „No Deal“-Brexit is becoming more likely and what might happen next

  1. Pingback: Staff News | King's European

Leave a Reply

Your email address will not be published. Required fields are marked *