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Brexit Update – The never ending story

12th December 2018

The day of MP’s meaningful vote and Brexit has arrived. And it has passed. Instead of a decision on one of more key parts of the Brexit process we now sit waiting for the result of a Conservative party ballot on Theresa May’s future as leader.

Those of you not able to avoid the news over the past few days will have seen Theresa May delayed the vote indefinitely and left her ministers to suffer the wrath of parliament while she jetted to Europe for a whistle stop tour of EU capitals. While she was gone enough of her MPs wrote letters of no confidence and now there will be a vote on 12th December on whether she can remain leader of the party.

Should a full Tory leadership election be needed it would not be able to be completed before the domestic deadline for a vote on the Brexit deal of 21st January. What this means for the path of Brexit is uncertain but as our note of last month (which feels like decades ago in the fast paced, disorganised world of Brexit) suggested; one thing is for certain. Something major will happen before or on the 29th March 2019.

With no major runner for Tory leader backing a people’s vote, parliament unable to pass the deal they have and unwilling to exit without one we are at an impasse. What parliament needs now is a strong opposition presenting an alternative, realistic and credible way forward. What parliament has is a Labour party just as unable to present a coherent option as the government.

The Labour party is not calling for a people’s vote, has not yet proposed a vote of no confidence in the government and seem to suggest they can negotiate a more positive Brexit deal with the EU than Mrs May. This is despite suggesting the same commitment to the Northern Ireland border and to end ‘freedom of movement’ for UK citizens in the EU and vice versa.

The major parties seem to be at a stale mate in Brexit positioning and so even a full general election seems unlikely to resolve the current mess without a major policy shift from one of them.

Every day that passes makes the uncertainty facing UK businesses and investors more concerning. But until we either see an unlikely shift from EU leaders or parliament have their say on the deal (or on the government) little has changed in reality.

One actual piece of new information has emerged however. The European Court of Justice confirmed that the UK can unilaterally revoke the article 50 declaration and stop Brexit.

With the weight of the 2016 referendum hanging over parliament it would be a brave government indeed to push this cause of action without a clear mandate, despite the varying degrees of pain within the other options on the table. So, the chances of this occurring without either a General Election of a further referendum seem remote, and time seems to rule out both of these before March 29th.

As things stand then the three options of a fudge and delay, a hard no-deal Brexit and Mrs May’s deal remain the most likely. However, with the events of the past few days the more MPs we see back a people’s vote could well be significant and open up the chances of no Brexit at all.

Read our Investment Directors thoughts on the possible options for Brexit here.

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