The decorations are down, the kids have returned to school and Brexit is back on the agenda. But has anything changed?
Following the box-set season-ending cliff-hanger of the delayed parliamentary vote on the Withdrawal Agreement in December, it is now set to take place on 15 January. Having faced a heavy defeat on the plan a month ago, the UK government postponed the vote in order to gain further assurances from the EU regarding the temporary nature of the Irish border backstop arrangement. It has expressed cautious confidence that such guarantees will be forthcoming and that they will be enough to persuade MPs to back the proposals.
However, the DUP, whose votes are crucial to the fate of the plan, remains sceptical about how the Withdrawal Agreement will protect the interests of Northern Ireland whilst many Brexiteers also continue to be opposed to its terms.
If, as still seems likely, the government is defeated on the issue then a range of alternative options come into play. The government has expressed reluctance to extending Article 50 but this may be unavoidable. Whether this course of action would achieve anything if the vote is lost is debatable as the EU has reiterated that the Withdrawal Agreement cannot be renegotiated. However, if the government were to win next week’s vote, an extension pushing back the Brexit deadline from 29 March would allow time for the necessary legislation to be passed to enforce the Withdrawal Agreement. An extension of Article 50 might also be permitted by the EU in order for a second referendum or General Election to be held. However, extending Article 50 would also involve the added complication of taking the Brexit deadline beyond the date of next the EU parliamentary elections due to be held in May.
Rather than extend Article 50, the government could decide to find a preferred arrangement that parliament could coalesce behind to avoid a no deal, including options such as adopting a Norway-style relationship with the EU or a permanent customs union. This could potentially be achieved by holding a series of indicative votes. Again, however, the government is lukewarm on this course of action and it’s a route that would inevitably lead to further delay with no guarantee of success.
Meanwhile, it appears that more than 200 MPs across parliament are ready to obstruct a no deal outcome. They have signed a letter to the Prime Minister urging her to confirm that this scenario will not be allowed to play out. An amendment to the government’s finance bill has also been passed which limits the government’s ability to raise certain tax in the event of no deal without the consent of parliament. The significance of this is that it’s the first time that parliament has flexed its muscles in a bid to thwart a no deal Brexit and more amendments are expected to be tabled on other proposed legislation with this intention.
As the uncertainty continues and parliament reconvenes, financial services firms are finalising contingency plans to move assets out of the UK before 29 March. The UK government is also stepping up its no deal preparations and issuing further advice to businesses in this regard.
The 12 days of Christmas are over, the 12 weeks to Brexit are just beginning…
