Brexit Blog 9: Stuck between Brextremists and a neverendum
In our ninth Brexit blog, we will reflect upon the developments of the last week and set out the remaining possibilities of a departure of the United Kingdom (UK) from the European Union (EU).
When we were considering a weekly Brexit Blog a couple of months ago, there was some doubt as to whether enough ‘blog-worthy’ news would come up weekly to fill the blogs. Right now, a daily Brexit blog would not be enough to cover all developments. There is so much going on, that London’s pubs during the Brexit votes are as full as during a regular rugby match of the English national team.
Last week was supposed to end in a clear route for the Brexit-strategy of the UK. It is safe to say this has not happened. A week of side-switching, confusion and accusations of betrayal led to anything but a clear Brexit-path. On the sunny side, this week did give us terms like ‘Brextremists’ (referring to people who still want a no-deal Brexit) and the ‘Neverendum’ (referring to holding multiple referenda to ‘force’ an unpopular decision).
Firstly, the House of Commons (the House) had to vote on an amended withdrawal agreement, which would lead to a smooth Brexit and transition period starting on 29 March 2019. However, the deal was rejected again. With the subsequent vote the motion to rule out a no-deal Brexit on 29 March 2019 was accepted. Another vote to delay the Brexit in order to hold a second referendum was rejected by the House. Therefore, a second referendum on whether Brexit as such should take place is out of the question (for now).
The previous paragraph is an extreme simplification of what really happened, as the week was more of a Shakespearean tragedy than a democratic lawmaking process. The votes in the House were very chaotic, as Members of Parliament (MPs) switched sides between parties (Labour voting for Tory-proposals and vice versa) and within parties (Brexiteers voting for Remainer-proposals and vice versa). Also a lot of discussions took place when the Speaker of the House (who decides which proposals are voted on by the House) - in short - denied a vote to rule out a second referendum, but allowed a vote to postpone Brexit for the purpose of a second referendum.
Even more dramatically, one of the votes last Wednesday was designated by the Tory-party of prime-minister May as a ‘three-line whip’, meaning that MPs must follow voting instructions on vital proposals (underlined three times by the party whip (the ‘vote coordinator’)). A ‘three-line whip’ is very serious as even a MPs position may be brought into question if it is rebelled against. Some of the MPs however, voted against the party standpoint, reportedly on the instigation of the chief of staff of prime-minister May, who had said it was a ‘free-vote’. This then led to allegations of betrayal and other drama.
All the drama and politics aside, the outcome of this week still does not indicate if, when and how a Brexit will take place. Therefore the victims of these developments are the people and companies of the EU (incl. for now still the UK) as there is no further certainty as to what they can expect. Preparations for a hard Brexit can still not be thrown away as a hard Brexit is not completely off the table yet. But what is still on the table?
The past week generally ruled out a no-deal Brexit on 29 March 2019 and also a second referendum is – for now – off the table. What is still on the table is a delay of the Brexit. As both a no-deal Brexit and the withdrawal agreement without further conditions are evidently not the ‘will of the people’, the Brexit-date will have to be extended. Prime Minister May indicated that an extension could either be a long extension (1 or 2 years) or a short extension (2/3 months). A short extension will only be sought if it can be used by both the UK and the EU to draft and adopt new legislation and prepare the governmental services, for that to happen, a withdrawal agreement must be approved by the House.
Whether or not the extension of the Brexit will be long or short, will depend on this week’s developments, when a third vote will be casted on a withdrawal agreement. If that is accepted - ‘third time’s a charm’ – the aforementioned extension will only be used for the preparations for putting in place such withdrawal agreement. If such withdrawal agreement is rejected again the long extension will have to be used for strategy reorientation (which could include national elections and/or a referendum).
This strategy is however the ‘unilateral’ strategy of the UK government. The legal reality is that all Member States of the EU will have to approve a short or long extension, as the Treaty on the Functioning of the EU prescribes a deadline of two years after the withdrawal notification (on 29 March 2017). Deviation of this deadline is possible, however it requires an approval of all 27 remaining parties to the EU (the EU-27). This means that every Member State has a veto. The discipline within the EU-27 in this matter has so far proven effective, but rebellious votes are not new in the Brexit-dossier.
This does not mean that the EU-27 will accept any extension unconditionally. A complicating factor are the elections for the European Parliament in May 2019. EU citizens, including Britons for now, can choose Members of the European Parliament (MEPs), which in turn select the European Commission. This is therefore a vital event in the political cycle of the EU.
From the EU so far the message has been that the UK will have to participate in the elections if they remain in the EU until after May 2019. In the UK, the Electorate Committee has already sent out guidelines to political parties to prepare for a European election campaign. Also the current MEPs delegated by the UK have been asked if they would reconsider another term. It is hard to imagine how British MEPs will campaign when UK-citizens already chose to leave the EU.
. Before an extension can be asked from the EU-27, the House has to vote again for one or the other. Last week has shown that it is rather unpredictable what proposals are voted on. Amendments are being prepared and it is even not sure whether a withdrawal agreement itself will be put to vote again. The House Speaker simply has the power to reject a proposal if - in short - a similar proposal has already been voted on. In case the UK does not have a proper offer to bring to the table to the EU summit this week, no agreement will be made, which brings the no-deal Brexit on 29 March 2019 back on the table again.
The moral of this story is to expect the unexpected, as none of the aforementioned possible scenarios can be ruled out. Companies cannot bank on uncertainty and the only advice that can be drawn from recent developments is to hope for the best and expect the worst. Preparations for a no-deal Brexit should not be put on hold –for now and inasmuch as not already available, companies should have an ‘emergency plan’ in place for a possible hard Brexit
If you have questions about the consequences of Brexit for your company, please feel free to contact our Regulatory Department.