The United Kingdom is facing permanent party break-up
Deal, no deal or no Brexit will do permanent damage to the UK party system
Conservative pro-Brexit MP Jacob Rees-Mogg yesterday submitted a letter to the party's backbench 1922 Committee, calling for a no-confidence vote on Prime Minister Theresa May. His submission follows her proposed Brexit ‘withdrawal agreement’ and came after the resignation of seven government ministers, who also oppose the agreement. May’s political survival will determine if the withdrawal agreement reaches Parliament for debate.
What next
If May loses a party no-confidence vote, her successor will have the impossible task of renegotiating the withdrawal agreement. If May survives a no-confidence vote, a special EU summit meeting will be held on November 25 to conclude the withdrawal agreement. Following that, the UK Parliament will vote on the agreement on December 10. If it is passed, the United Kingdom will leave the EU as planned on March 29. If it is rejected, the withdrawal agreement will not be sanctioned, and a no-deal Brexit will be likely.
Subsidiary Impacts
- The mass mobilisation of 'Remainers' and 'Brexiteers' will strengthen, resulting in public protests.
- Tensions between the Irish government and Northern Ireland’s DUP will worsen.
- More businesses will make plans to leave the United Kingdom.
Analysis
The withdrawal agreement focuses on three key areas: citizens' rights, a 'divorce settlement' and the provision on avoiding a hard border in Ireland.
The UK-wide 'backstop' agreed between the United Kingdom and the EU is highly contentious, as the United Kingdom cannot terminate it unilaterally. This is seen as de facto EU control over whether the United Kingdom can ever leave the customs territory of the EU.
UK-wide backstop could form the basis of future UK-EU economic relations
Indeed, some EU officials have reportedly said the temporary UK-wide backstop could become a permanent arrangement, whereby the United Kingdom would be indefinitely tied to the EU customs union, and therefore its trade rules, so that London would be unable to pursue its own free-trade deals with non-EU countries.
The European Court of Justice (ECJ) is mentioned over 60 times in the agreement. The continuing ultimate jurisdiction of the ECJ over matters of EU law in relation to the backstop suggests the EU will hold the balance of power in future relations. A joint committee governs most decisions, but the EU would have ultimate say over whether the United Kingdom was abiding by the terms of the agreement.
No deal
A 'no-deal Brexit' seems the most likely outcome, following yesterday's resignations and parliamentary backlash over the withdrawal agreement.
Until now, May had hoped that the prospect of no deal would be convincing enough to gain support for her deal. Instead, it has become clear that many Conservative MPs would settle for no deal, as they insist it would be better than May's deal.
There are two plausible ways in which a no-deal Brexit would occur.
May's defeat
If the 'Brexiteers' can accumulate the required 48 letters against May, a vote of no-confidence will take place. For May to lose the vote, 158 MPs (50%) would have to vote against her. It seems currently unlikely that she will lose the vote, but further resignations are possible, and depending on their stature, they could weaken her chances of survival.
Significantly, if May loses the vote or further cabinet support forces her to resign, her withdrawal agreement, or any agreement similar to it, would be virtually impossible. It is highly unlikely that the EU would renegotiate the agreement with another leader: it believes it has already made enough concessions through the provisions in the backstop. This would make the prospect of a no-deal Brexit inevitable.
May's survival
If she survives, May will have one year of immunity from another leadership challenge, so that the no-confidence vote would have inadvertently strengthened her position.
Surviving a no-confidence vote could strengthen May's power base
In this case, the government will present the withdrawal agreement to Parliament for approval on December 10. However, votes against from a combination of the Democratic Union Party (DUP), Conservative Party hard-line 'Remainers', Brexiteers and opposition parties is highly likely and will increase the chances of a no-deal scenario.
A no-deal Brexit would be the most economically damaging outcome for the UK economy, which could shrink by 5-8% in the long run, according to the IMF (see UNITED KINGDOM: Labour market pressures will rise - July 16, 2018).
The political damage of no-deal Brexit would be permanent. Particularly in the Conservative Party, pro-EU members will perceive the economic downturn as vindicating their calls for a second referendum. Pro-Brexit members will remain convinced that economic challenges will be overcome, and that the deal is still fundamentally better than May's current agreement.
It is plausible that the party could suffer a large number of defections, and also break up, between ideologues who prioritise political sovereignty at all costs, and people within the party who think economic and social concerns should form the basis of policy.
No Brexit
The second most plausible scenario would be no Brexit, which would need to be facilitated by the EU's willingness to extend Article 50 -- the March 29 deadline to leave the EU.
General election
If either May loses a no-confidence vote in her party, or the withdrawal agreement is rejected in Parliament, a general election would take place, making it almost impossible to get a deal completed by March.
In this case, the EU would probably extend Article 50, especially if it believed it would facilitate the United Kingdom staying in the EU.
Second referendum
Another possibility of no Brexit would be if the no-deal scenario seemed increasingly likely, causing a dramatic rise in support for a second referendum.
Crucially, there are many MPs who support a second referendum, but will back May's agreement because of fears of no deal. If May's agreement were defeated, they would then turn to supporting a second referendum.
Although a second referendum would be technically difficult to organise, again the EU would consider extending Article 50, if it appeared likely that the United Kingdom would vote to remain in the EU.
According to the latest YouGov poll, despite the increasing prospects of a no-deal Brexit, 54% of people would vote to remain, with 46% backing leave. Indeed, a second referendum would not resolve the divisions undermining stability across the UK political landscape.
A second referendum would likely deliver deep division
An amendable deal?
May has insisted that the withdrawal agreement is not final, seeking to amend it before the special EU summit on November 25. However, the amendments would have to be significant, such as a renegotiation of the backstop, to allow any chance of Parliament approving it (see UNITED KINGDOM: May's Brexit plan may not win majority - July 19, 2018).
May's only window of opportunity in getting a deal through Parliament lies in providing details of the future EU-UK trading relationship that would avoid the implementation of a backstop.
However, in order to convince Parliament that no backstop will be required, she will need to convince the EU to drop plans for "customs arrangements that build on the single customs territory provided for in the withdrawal agreement".
If the deal is somehow passed by Parliament, Theresa May could decide to resign as prime minister after March 29. It is likely that if there is a deal, many MPs from across the Brexit divide would respect Parliament's decision and get behind it.
However, the potential implications of a permanent backstop will have long-lasting effects, creating a new scenario where a battle will persist within and across political parties between hardline Remainers, Brexiteers and defenders of the future relationship.
