Flash Report on Today’s Brexit Vote

By Lucinda Creighton, CEO & Robert O’Reilly, Strategic Counsel | Vulcan Consulting 

  1. Situation Analysis

Today’s vote presents yet another “crunch moment” in the long running Brexit saga.  For those who have not been following in any great detail, this is Prime Minister Theresa May’s big moment in the House of Commons, when she will attempt to get the deal she has agreed with the European Union through by way of parliamentary vote.  This so called ‘Exit Deal’ does not set out the future trading relationship between the EU and UK in any detail, but simply agrees the terms on which the UK leaves – tidying up budgetary matters, the Northern Irish border question, the rights of EU citizens and so on. The detail of a trade deal will come later. 
 

  1. The Significance of the Vote

The vote is very significant because Parliament must approve the Exit Deal, otherwise it fails. While it was approved by the British Cabinet last November, ratification by Parliament is legally required. The problem is that there is essentially no chance that the Members of Parliament will vote to approve the deal today. In early December a groundswell of opposition to May’s deal emerged amongst both Government and Opposition MPs. At the time Theresa May postponed the crucial vote in Westminster in the hope that she could pile pressure on MPs over the Christmas recess and avoid an embarrassing defeat for her government. This plan has clearly failed.  The expected defeat of the Prime Minister’s deal in Parliament today will plunge the UK into a further constitutional crisis. The degree of the crisis will, rather unusually, depend on the scale of her defeat. We anticipate it will be a heavy loss.
 
 

  1. How the Numbers Stack Up

The magic number of a simple majority in the House of Commons is 320. 

  • The UK Prime Minister’s Conservative Party have 318 members.  Previously over 100 members went on the record opposing May’s Deal and 117 members vote No Confidence in May before Christmas which could also be taken as a proxy vote on the deal.  While her campaign of terror (threatening a general election or No Brexit at all) may have clawed back some support, it is not nearly enough.  The pro-deal Conservatives number roughly 230.
  • The opposition Labour Party has 257 members, and within its ranks, it is anticipated that they will vote in bloc against a deal as it neither satisfies the pro-European wing of the party nor the Eurosceptic wing. 
  • The DUP, Unionist Northern Ireland party, have 10 members, and intend to vote against the deal.
  • The Scottish National Party, Liberal Democrat Party, Plaid Cymru and Green Party cumulatively have 52 members, all of whom will vote against the deal.
  • There are currently 8 “Independent” members who are a combination of members that have been kicked out of Labour or Conservative party for a variety of reasons and actual independents, with only 1 vote in favour of the deal within this group.
  • In a worst-case scenario, the majority against the deal could be as much as 226 MP’s. 125 is the biggest loss ever imposed on a UK government so the severity of the loss is an important factor in the UK.

In short Theresa May has no chance of passing her deal, even if many of her Tory colleagues have had a change of heart in recent days. PM May’s recent assurances on the Northern Ireland Backstops do not seem to have brought many Conservative dissenters back to her side.
 
 

  1. What they Want

Every MP has a vote and as we have seen in recent years, those who organise themselves effectively, like the European Reform Group (ERG), tend to have most clout. In recent weeks we have seen various coalitions of moderate Tories and Labour MPs coming together to defeat the Government on key amendments.  It will be a similar disparate group which defeats May’s Deal today. However, do not be fooled.  Many of the same people will vote against the May Brexit Deal today, yet they will never align to support a constructive solution. 
 
The temptation to try to have one’s cake and eat it, has long been a feature of the Brexit debate in Parliament. The problem is that everyone has a penchant for a different type of cake. Some want the May Deal (remaining Cabinet Members); some a harder Brexit than May offers (ERG); some want a Norway + Deal, which effectively means staying in the Single Market and Customs Union (moderate Labour and some Tories); some simply want to have an election without any real plan (Corbynites). The likelihood of a majority forming for any solution after today’s vote seems remote. 
 
In terms of amendments, Hilary Benn has withdrawn an amendment that would seek to tie the UK to no exit from the EU without a deal. As a result, the one to watch is Amendment A from Labour front bench proposed by Jeremy Corbyn, Keir Starmer and others. This seeks to rule out a ‘No-Deal’ departure, and criticises May’s plan for not providing “a permanent UK-EU customs union and strong single market deal”, which would harm business and could mean the Irish backstop coming into force.
 
 

  1. Who to Watch

Some of the protagonists in the Brexit story, other than the UK Prime Minister, will become more important in the days and weeks following the vote. It is important to understand their motivation and outlook.
 
United Kingdom
 
Jeremy Corbyn
Corbyn is a committed Eurosceptic who has opposed every step of EU integration and every treaty since before the UK joined in 1973.  He now finds himself in the uncomfortable position of leading a Parliamentary party which is almost entirely opposed to Brexit and in favour of either a Norway + deal or a second referendum.  Corbyn and his hard left, Marxist-sympathising Shadow Chancellor John McDonnell want neither. Corbyn gave a bizarre interview on the BBC last Sunday claiming he could deliver a Customs Union agreement which will allow the UK joint power with the EU to negotiate Free Trade Agreements. His fantasy position is almost as deluded as that of the extreme wing of the Tories. His default is to demand an election, with no view as to what happens afterwards, other than his replacing Theresa May in the top job. He is a major obstacle to finding a common position in Parliament on Brexit. 
 
Hilary Benn
As Chairperson of the UK Parliament Exiting the EU Committee, he has led on much of the pragmatic research into the effect of a ‘No Deal’ exit on the UK. He is respected across the aisle and he may be able to lead some remain Conservative MP’s to support a future bill that will instruct the UK government to extend seek an extension to Article 50 and ultimately limit the ability of the UK to leave the EU without a deal. Benn will want greater certainty of the UK’s future relationship and supports EEA membership.
 
Sajid Javid
Many would say that Sajid Javid is “waiting in the long grass” for his shot at becoming PM. Javid was a supporter of the exit campaign and remains a committed Brexiteer. As Home Secretary, Javid now has oversight of the UK’s immigration controls and has been attempting to position himself as tough on illegal immigration. Expect him to stay out of the limelight calling for her resignation but he will be showing strength and control by talking about Border Security with or without a Brexit Deal.
 
Michael Gove
Gove was a central part of the leave campaign and famously sought to become PM in 2016. Gove seems to have changed tack since becoming Agriculture and Fisheries Secretary in DEFRA. He has been a surprising strong supporter of the PM’s deal and so intends to stay in government with May. Any change from Gove after the vote will likely signal PM Mays demise on the horizon. He will also have a role in the vote on the 21 January.
 
David Davis, Dominic Rabb, Arlene Foster
Two former Brexit Sectaries and a former Northern Ireland First Minister have come together to “chuck the Backstop” as they believe it is corrupting a good Brexit for the UK and that the Backstop is unnecessary. This is a broad grouping with David Davis stating that the UK should not be worried about a WTO deal while Arlene Foster looks on nervously. The reality is that all three people have influence with the Parliament and the wider Brexit support base. They will be making noise in a triumphant manner after the vote as vindication for their hard-line positions to date. This will bolster their resolve over the next week or so. Arlene Foster is clearly acting against business interests in Northern Ireland.
 
Jacob Rees-Mogg
The hard-line Brexit supporter exerts considerable power as Chairman of the ERG grouping in the Parliament and is something of a poster boy for ‘No-Deal’ exit cohorts. It is unlikely that he will call for the PM to resign however he will increase rhetoric of a UK exit on WTO terms. His language to date has been carefully crafted to suggest a WTO exit is a legitimate outcome and will find support for this proposition in some dark quarters of the Labour party and the DUP.
 
Nicky Morgan
Morgan is the defacto leader of some 10 to 15 Conservative MP’s that want the UK to remain in the EEA as a minimum. She has indicated that she will back PM May’s deal rather that vote against the Party. She will be key in bringing the conversation towards an Article 50 extension request or EEA membership.
 
European Union 
 
Michel Barnier
Barnier’s job, as Chief EU negotiator with the UK is effectively complete in that he has delivered a deal which is solid from the EU’s point of view and delivers on the key priorities. However, his role as counsel in Brussels and potential conciliator in London cannot be underestimated. His years of experience in French and EU politics will continue to be drawn on as crisis in the UK takes hold. Barnier still has his eye on a future senior role in the EU institutions and so is likely to continue to try to find agreement with the UK and be a good faith interlocutor. He has carried out the negotiations in a pragmatic and up front fashion, belying his national predilection to ‘bash the Brits’. 
 
 
Jean Claude Juncker
President of the EU Commission, Jean Claude Juncker has been, in the main, more subtle in demonstrating his frustrations with the UK than his EU Council counterpart Donald Tusk. Juncker has more than 30 years under his belt as a Minister and Prime Minister in Luxembourg. Despite some media ridicule, he is a wily and skilled negotiator. Juncker will maintain absolute commitment to the integrity of the Single Market and will not cede ground to those who wish to leave the EU but avail of all of the benefits. He will however engage with the UK Government and Parliament to try to find compromises. He will be open to extending the Article 50 negotiating period in order to avoid a hard and destructive Brexit.
 
Angela Merkel
The German Chancellor’s electoral woes have undoubtedly diminished her influence in Europe, yet she is still the most powerful leader at the EU table.  She is emotionally and politically invested in the EU and like Juncker, will not countenance any erosion of the Single Market, despite the concerns of the powerful German car industry. However, the weakening German economy will ensure she is sharply aware of the risks of a hard Brexit and will continue to engage with the UK to try to find a solution. She has expressed unflinching solidarity with Ireland on the controversial Backstop, a position which will not change unless it alters in Dublin. 
 
Leo Varadkar
Leo Varadkar has cleverly and successfully ensured over the past 18 months that Ireland’s priority of ensuring no hard border on the island of Ireland through the Backstop solution (effectively keeping Northern Ireland in the single market and customs union indefinitely) has become the EU’s priority. Warnings that Ireland would be hung out by EU colleagues at the 11th hour in order to appease the British have not and will not materialise. However, the realisation is dawning in Dublin that the insistence on the Backstop could lead to a fate which is worse. If the Backstop looks likely to cause the UK to crash out with “No Deal” and no official transition period, the implications for Ireland are worse than any other EU country. Dublin will be staring down the barrel of a gun and the Irish Government may have to make difficult choices in March. Indeed, while the Opposition Fianna Fail party have supported Vardkar on the Backstop to date, the blame game will start in earnest if May’s deal collapses and “No Deal” Brexit looms.
 

  1. What’s Next?

There is an expectation that once the vote in Westminster has concluded, the type of Brexit we can expect will become apparent. This clarity is wishful thinking and may in fact further paralyse the UK Parliament and lead to a ‘No Deal’ by accident  Other than the fact that a full blown constitutional crisis will be underway, little is likely to change.
 

  • Forced Resignation – Probability 5%

In the ordinary course of business, if a Prime Minister were to lose a vote of such fundamental magnitude, she would resign. If we have learned anything about Theresa May in the past 33 months, it is that she has considerable sticking power.  She has no intention of resigning and so the UK will limp into an existential crisis with a lame duck Prime Minister. Her party cannot move to topple her, having held a very ill advised and ill-timed Confidence vote in December. That rash move, spearheaded by the ERG hard liners, prohibits another move against her leadership for 12 months. The only other way to remove her will be a motion of Confidence tabled by the Opposition in parliament. Jeremy Corbyn says he intends to do this in the days after the vote and he may find some minor Conservative rebel support for this However, such are the divisions between Labour and the Conservatives and such is the Tory fear of an election, this motion of confidence in Theresa May is likely to fail.   There is a fair chance that the DUP would support a motion of no confidence in the Prime Minister, but they would undoubtedly support a Tory alternative for the PM job – possibly Boris Johnson or another hard line Brexiteer who has made overtures to the party in recent months. 
 

  • Referendum – Probability 5%

Many in Labour and an increasing number of moderate Tories would like to see a second referendum occur. The main obstacle to this are the Leaders of the two main parties. Corbyn does not want a referendum because he tacitly supports Brexit.  Theresa May has claimed that a fresh referendum would undermine democracy and thwart the will of the people. It is still difficult to see a majority in Parliament to force a second referendum, but it is not impossible that momentum would grow in the coming weeks. If Parliament were to propose a referendum there is no doubt that the EU would agree to extend the Article 50 timeframe. A more remote prospect is that Theresa May will seize the opportunity after her deal is rejected to put it up to Parliament by unilaterally declaring that she will hold a referendum on her Deal. This would be a surprising and bold move which would be out of character and is rather unlikely. 
 

  • General Election – 5%

Jeremy Corbyn continuously talks about the need for an election.  This is a ploy designed to conceal the absence of any credible position on Brexit.  A general election is likely to deliver a very similar result to the 2017 General Election, according to ongoing opinion polls. Notwithstanding Corbyn’s determination to force an election, he has no mechanism to trigger one.  The Fixed Parliament Act requires a majority in Parliament to enable a general election. The entirety of the Conservative Party is opposed to an election, as is its coalition partner the Democratic Unionist Party.  There is no majority for an election in Westminster. 
 

  • Parliamentary majority for Norway + or Customs Union? – Probability 20%

Many on both sides of the house have presented a Norway + deal (remaining in the Single Market and Custom’s Union) as the ultimate panacea. There are a number of problems with this. For those opposed to Brexit, like moderate Conservative MP Joe Johnson, who are voting against Theresa May’s deal because it reduces the UK to a rule taker and leaves the country worse off than as an EU Member State, the Norway solution cannot work for all. To steal a phrase from Brexiteers, it would make the UK more of a “Vassel State” than the deal currently on the table. The UK would have all of the obligations and none of the decision-making rights of an EU member. It may be a solution acceptable to the Hilary Benn wing of Labour, but it is unclear that Jeremy Corbyn and his followers would stomach such an outcome. It would be difficult for cross party coalition to be found that would find a majority to deliver Norway + UK politics just doesn’t work that way.
 

  • Extension of Art 50 – 30%

This is not an outcome in and of itself, but the chaos in Westminster suggests that the UK Government will request an extension of Article 50. Such an extension can only endure until July 2nd when the new European Parliament will be sworn in. It should be noted that extension will require the approval of the EU as well as the UK and agreement will only be forthcoming if some plan emerges from London.  While the EU will want to facilitate the avoidance of a March 29th cliff-edgel, there will need to be a convincing reason to draw out what has already been an excruciating process for all concerned. 
 

  • Irish Govt capitulation? – Probability 15%

The EU will only soften its position on the Backstop if Dublin requests it to do so. As the Irish Government has stepped up its planning for No Deal the stark reality of hard Brexit is really beginning to hit home. The impact on forecasted Irish GDP growth would be immense, with entire industries potentially wiped out. There is no doubt that the Government will keep events in Westminster under close review.  If faced with the prospect of a ‘No Deal’ Brexit and the ensuing economic catastrophe, the Government may be forced to adopt a wording which fudges the permanence of the Backstop. This and is an outcome that the Government currently does not wish to countenance at present but it must be pragmatic in the long term or the effects of a no deal could plunge Ireland into a recession with the UK.
 

  • No Deal by Accident – Probability 20%

As one examines the alternatives, the likelihood of No Deal grows exponentially.  There is a parliamentary majority in Westminster to block a ‘No Deal’ outcome, yet that majority is worthless in the absence of a majority to support an alternative.  If no alternative can be found, which is agreeable to a majority in the House of Commons, crashing out without a deal becomes the default.  It seems the most likely way to achieve enough consensus in the UK would be to have some softening of the language and perceived outcomes around the Backstop, but this is politically difficult for the Irish Government to agree to. In the absence of any change to the May Deal on this front, No Deal Brexit may become unavoidable. 

Compliments of Vulcan Consulting , a member of the EACCNY