Brexit chaos makes for great drama, a frightening future

The shenanigans in Westminster this week would make great entertainment if it were not for the seriousness of what is at stake.

Having lost the so-called “meaningful vote” on her deal for withdrawal from the European Union (EU) by a margin that challenged the ability of commentators to conjure up suitable superlatives, Theresa May narrowly avoided defeat in a motion of no confidence that would have ended her tenure as U.K. prime minister.

{mosads}She did so only because the Democratic Ulster Unionist Party honoured its commitment to support the Conservative-led government in confidence votes, after voting against the Brexit deal 24 hours earlier.

Despite the drama, nothing has been resolved about Brexit, and the looming deadline of March 29 for the U.K. to leave the EU is creeping remorselessly closer. Formally, unless the U.K. ratifies the 585-page withdrawal deal agreed with the EU after lengthy negotiations, it will exit the EU at the end of March with nothing in place.

Most commentators agree this would be a damaging outcome not just for the U.K., but also for the EU side, because of the disruption it would engender to established business links, administrative procedures and citizens’ rights. Some might also note with a wry smile that the first working day of this new world will be April Fool’s Day.

Avoiding “no deal” has, therefore, become a widely shared objective, with only the most hard-line Brexiteers willing to contemplate it. But how to break the current political deadlock is far from clear.

Theresa May has claimed for weeks that the choice the U.K. faces is between the deal so comprehensively rejected on Tuesday by Parliament and no deal, yet she still seems to believe that a few tweaks to it coupled with some reassuring language from the EU side will be enough to make a difference.

This stance is rejected by many in the Conservative Party she leads and by most members of the various opposition parties. Nor is it true: Theresa May boxed herself in before the negotiations with the EU by setting out red lines in her January 2017 Lancaster House speech, including:

• an insistence on the U.K. exiting the EU customs union;
• ceasing to be subject to the European Court of Justice; and
• a promise that the U.K. “will not be required to contribute huge sums to the EU budget.”

Ironically, having started the negotiations with strong positions, May has repeatedly had to back down. As Dahrendorf Forum colleagues have documented, it has been a masterclass in how not to negotiate a deal.

But she remains adamant that the 2016 referendum result must be respected, notwithstanding polling evidence that public opinion has shifted toward a narrow majority for remaining in the EU.

Although the EU has made clear that the deal on the table cannot be re-negotiated, there are various other pathways open to the U.K. body politic if its pre-conditions are jettisoned, of which the most prominent latterly has been a variant on the “Norway” model.

This would entail the U.K. remaining inside the EU single market, a pathway that would require accepting free movement of EU workers and continuing to make substantial financial contributions to the EU, manifestly crossing May’s “red lines.” 

A further objection is that it would leave the U.K. as a taker of EU rules without the ability to shape them, leading to “Norway” being castigated as “Brexit In Name Only” (BRINO).

Alternatively, there could be a second referendum, despite the rather surreal assertion from many that it would be a betrayal of the 2016 vote and undemocratic.

The trouble is that there has been too little effort to explain to the public or to debate the merits of different ways of structuring the relationship between the U.K. and the rest of the EU, nor of the difficult trade-offs to be reconciled.

As a result, even after the drama of the last few days, it is unclear how a decision on what happens next will be made. Theresa May, unable to corral her own MPs, has responded to the defeat in the House of Commons vote by seeking to reach out to other parties in an attempt to establish what might be able to command a majority.

But her overtures were immediately rebuffed by the leader of the Labour party, Jeremy Corbyn, who continues to call for a general election.

There is also a power struggle underway between the House of Commons and the government. The U.K. Parliament is seeking to take back control using a variety of ploys and procedural devices aimed at overriding what remains a profoundly split government.

{mossecondads}There was an eruption of acrimony when the speaker of the House, John Bercow (formally, in contrast to the role played by U.S. Speaker Nancy Pelosi (D-Calif.), the Commons speaker is a non-partisan position), ruled against the government on accepting a back-bench amendment.

The political chaos, perhaps surprisingly, does not seem to have spooked financial markets as some expected. In fact, both the pound and the FTSE 250 share index rose in value two days running. A possible interpretation is that the markets now believe the politics is moving away from more extreme outcomes, notably, “no deal.”

Nevertheless, the uncertainty around Brexit is weighing on the British economy, and there are concerns on the other side of the English Channel that it could have damaging effects across the continent, not least by deferring investment decisions.

At a time of wider concerns about the global economy and the challenges to the international trading system, the world could do with a rapid resolution of Brexit.

Making a prediction on the outcome is hazardous, but a delay in leaving the EU, possibly to allow a second referendum, is becoming more likely.

Iain Begg is a professorial research fellow and co-director of the Dahrendorf Forum at the European Institute of the London School of Economics and Political Science.