Brexit goes back to square one

17 January 2019
main A campaigner dressed as Theresa May holds a prop as part of a campaign stunt promoting a second Brexit referendum, outside the Houses of Parliament in London, Britain, January 15, 2019. REUTERS/Toby Melville
Though Prime Minister Theresa May had expected parliament to reject her exit deal with the EU, she had worked hard to limit the opposition in hopes of being able to resubmit it after some small modifications. That is now looking much more difficult after lawmakers voted it down by an overwhelming margin—432 to 202—likely forcing a complete rethink of the Brexit strategy. Eurasia Group expert Mujtaba Rahman explains the next steps.

May to propose way forward on Monday
In normal times, crushing parliamentary defeats have led to the resignation or ouster of British prime ministers. But amid the turmoil and uncertainty of Brexit, May's job is probably safe for now. She survived a no-confidence vote called by Labour Party leader Jeremy Corbyn immediately following the rejection of her deal. Corbyn's ploy served to temporarily reunite the prime minister's Conservative Party—deeply divided over Brexit—which does not want the general election that would likely follow if Corbyn were to win. Furthermore, May cannot be ousted by members of her own party. A no-confidence vote brought against her as party leader failed last month, and under Tory rules she cannot be challenged again for 12 months.  

May will respond formally to this week's defeat on Monday with a Commons motion outlining her new approach to Brexit. Lawmakers will be able to present amendments and a debate on the motion is expected later in the week. The process could provide the first clues on the type of deal capable of commanding a parliamentary majority.

Cross-party talks
The government will start outreach efforts to representatives of different parties, though it will not initially include Corbyn and will be aimed mainly at wooing May's Tory critics, the Democratic Unionist Party, and Labour rank-and-file members—for example, by beefing up guarantees on workers' rights and environmental protection.

May's objectives in the talks will remain the same as those that underpinned the existing exit agreement with the EU: respecting the result of the 2016 referendum by “regaining control of the UK's money, borders and laws” and having an independent trade policy. But this approach would rule out the kind of Brexit that could attract cross-party support—a Norway-style relationship with the single market and customs union that pro-European cabinet members are now advocating. They believe May will have to dilute her red lines if talks are to make any progress. Another group of ministers wants to keep alive the possibility of a no-deal departure—which would likely cause tremendous economic disruption—to try to persuade more Tories to back May's deal, and to extract concessions from the EU.

At the other extreme are lawmakers calling for a second referendum. Corbyn is expected to come under strong pressure from grassroots members of his party to allow the British public an opportunity to reverse its decision on Brexit.

EU in wait-and-see mode
The UK will be forced to ask for an extension in the Article 50 exit process. Even if the Commons were to pass a revised deal next month, there would almost certainly not be time to pass the necessary legislation before the current 29 March deadline.

In Brussels, the collapse of the Brexit deal is seen as a UK problem—and one that is obviously going to take time to fix. Across the EU's institutions, there is a pervasive belief that May has completely misread the mood in parliament. Officials question why she didn't test different options by asking lawmakers to vote on them. There is no expectation in Brussels of a quick resumption of talks with the UK.
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Mujtaba (Mij) Rahman leads the firm's analysis on Europe, helping clients navigate elections, Brexit, EU-Turkey dynamics, bailout politics in Greece, European Central Bank politics and policy and EU sanctions policy against Russia, to name a few recent issues.