Brexit Briefing 79: Groundhog Days

GroundHogDay

Every week for the past two months we have been waiting and expecting the decisive breakthrough. The expectation has been, week after week, that finally the hard choices would be taken and that the ultimate path of Brexit would become clear.

This week was no different and although it was another extraordinary week in British politics, at the end of it we were no closer to knowing what Brexit would look like than we were at the start of the week. With the UK now in extension territory, having originally planned to leave the EU last weekend and with a new hard deadline of the 12th April fast approaching, the week started with another series of non-binding indicative votes in Parliament to try to find a way forward.

The Parliament once again rejected all the options on the table. Including a proposal for Common Market 2.0 which proposed the softest possible Brexit - membership of the single market and a customs union with the EU. It was rejected by 282 votes to 261. A second referendum was also defeated by 12 votes as were options to join a customs union alone and to give Parliament the final day to block a no deal Brexit. 

This left the Parliament again unable to offer any path forward and demonstrated clearly the lack of good options that are currently on offer for the UK.

However British politics took a dramatic turn on Tuesday evening when Prime Minister Teresa May gave a televised address to the nation where she offered to work with the Labour leader Jeremy Corbyn to find a way out of the impasse.

This is highly unusual in British politics, partly due to the confrontational nature of Westminster politics but also because Jeremy Corbyn is widely loathed by members of the Conservative party because of his hard left views.

Corbyn

It caused significant unrest within the party and resulted in the resignation of two more ministers. The talks themselves, which took place later in the week, didn’t seem to go anywhere. Reports suggest that Labour will demand a referendum on any deal & a customs union as the price of their support. The reality is that politics aside, the Labour customs union position is very close to what is negotiated in the withdrawal deal, which lays the framework for a customs union unless the UK agrees that Northern Ireland is excluded from any future trade deal.

However any deal negotiated by a Conservative Prime Minister which can only get through due to Labour support, especially if it includes the option of a customs union, will deeply destabilise the Conservative party. It could well bring the government down before it and the accompanying Withdrawal Bill are able to get through Parliament. It is therefore unlikely to be a sustainable way out of the crisis.

Brexit politics didn’t slow down from there, as on Wednesday Parliament held another series of very close votes. This time MPs narrowly rejected another series of indicative votes thanks to a casting vote by the speaker and then late into the night, MPs voted with a majority of just one vote on a legislative bill aimed at stopping a no deal Brexit. This bill took only a day to get through Parliament and at the time of writing was set to go to the House of Lords. However, it was likely to be completed by the end of the week.

This however does not guarantee that a no deal brexit will be stopped. It legally mandates the government to negotiate with the EU to avoid no deal, however it takes two to tango after all and the ball now is firmly on the EU’s court.

EU leaders will hold a summit next Wednesday to decide if the UK have met the conditions it imposed in order to offer the UK a further extension. This is probably the biggest irony of where we have got in the Brexit negotiations - EU leaders alone will decide the fate of Britain, the world’s fifth largest economy, a UN Security Council permanent member and a nuclear armed power.

If they refuse the UK’s request for a further extension, the UK will leave the EU next Friday, and the short to medium term disruption is likely to be very significant, not just in the UK but also in parts of the EU.

As a result, the EU will almost certainly grant the UK request to extend, particularly as the UK has signalled a willingness to take part in the European elections on the 22nd May.

However two issues remain - firstly how long should the extension be - to 22nd May, or longer, or even, as the PM appears to favour, a long extension with the ability to leave immediately if the withdrawal deal is passed in the meantime? Sources close to European Council president Donald Tusk say that he favours a 12-month extension, that would see the UK leave the EU once that agreement is approved.

The second question is what other price will the EU demand for the extension? It originally demanded both participation in the elections and a new proposal which had the support of Parliament. Failing that it wanted a commitment to a referendum or a general election.

The odds are on a long extension, however as the UK Parliament can not show consensus on any path forward, and (barring the government collapsing) a general election isn’t likely to change anything regarding Brexit, the EU is likely to allow the extension without their second demand being met. However, given the increased domestic pressure for a referendum, the PMs desire to get Labour votes for her deal and the demands from the EU, it is possible that a confirmatory referendum on the deal emerges as the last option standing.

The EU has its own no deal challenges though which means it is likely to ease the pressure on the UK and agree an extension.

The biggest problem of all is how does the EU deal with the Irish border in the event of no deal and this week shows that those strains are beginning to show.

The European Commission has been just as vague on how to avoid the border as the UK was earlier in the negotiations. Their spokesman regularly suggested that checks can be done away from the border and that technological solutions will be able to minimise physical checks.

IrishBorder

But the reality is that the checks have to be done somewhere and given that the UK has said that it won’t police the border from its side, the EU is torn between protecting the integrity of its “single market” or forcing Ireland to impose a border.

As the reality is that a border can’t be avoided and that it can’t be put up on the island of Ireland without undermining the peace process, some in the EU are coming to the only other conclusion. - The checks will need to be between Ireland and the rest of the EU. Indeed French sources were claiming that this would happen this week much to the disgust of politicians in Ireland, who would rightly see this as excluding Ireland, against its will, from the single market.

All this points to the folly of refusing to negotiate the future trade relations in the first phase of negotiations. These issues can not be solved until the terms of trade are known, and if they are not known either the UK or the EU will be forced to cut their Irish part off from the rest of their internal markets. Trying to make the British do this is the only reason we are heading towards a possible no deal, which would then force the EU to have to do this, which would be as disastrous for the EU as it would have been for the UK.

So we end the week with many unanswered questions but an increasingly clear general direction. The UK almost certainly won’t be leaving the EU next week. The 22nd May could well become the next deadline, but the UK will have to prepare for European elections in the meantime. There is a chance that the UK may leave on May 22nd without a deal, especially if the politics changes again in the UK, which is very possible, but given that this would happen two days before continental Europeans go to the polls (in most EU countries the election is on Sunday 25th May), it is a safe bet that the EU will do all it can to avoid this.

A long extension is therefore looking highly possible. There is also an emerging political consensus in London around two likely options: a customs union and a possible referendum on the final deal when it is agreed by Parliament.

Given that a customs union is in many ways much worse than staying in the EU, especially from a trade perspective, there is a likelihood that if the choice is eventually given back to the people, and it includes a customs union, the UK may well vote not to leave the EU at all in the end.

Brexit has never looked so precarious, and the options so wide apart. No deal or no Brexit are both winner-takes-all propositions and absolute victories for either Leave or Remain voters.

However it is looking increasingly likely that there is no option between these two that is viable in the long run. To have got to this point a number of mistakes have been made by all sides, of which triggering Article 50 before the UK knew what it’s negotiating stance was and the EU’s insistence on sequencing the negotiations to avoid trade talks in the withdrawal agreement, are probably the most significant.

However the real reason we are all in the current mess is because hung parliaments are inherently unstable. People may be watching the British Parliament with disbelief, but this is what is supposed to happen with a hung parliament. They are designed to check the power of a government which didn’t get a majority in the general election (especially one debating such a divisive issue).

That means it won’t be able to last long, and in the end the EU may get its wish of a general election or a referendum. If either of those come to pass, it won’t be by design, but by accident. And there is still no way to know how it will end.