RG TAKE: 29th March – Don’t Save The Date

As the Brexit process continues to be buffeted by domestic political factors on both sides of the aisle, Rasmussen Global’s James Holtum gives his take on what events of the past week could mean for the Withdrawal Agreement, Article 50, and the prospect of another referendum. 

As the Brexit process continues to be buffeted by domestic political factors on both sides of the aisle, Rasmussen Global’s James Holtum gives his take on what events of the past week could mean for the Withdrawal Agreement, Article 50, and the prospect of another referendum. 

PARTY MANAGEMENT

Jeremy Corbyn’s backing for a fresh referendum, and Theresa May’s announced parliamentary contingency votes have been driven by the need to maintain Cabinet and Party unity above all else.

The events of the past 48 hours mean that PM May has lost leverage in some quarters – no longer able to threaten a crash out of the EU. However, she may have gained elsewhere, focusing the minds of some Conservative Brexiteers who fear the Brexit project is heading towards the buffers.

Last week’s breakaway of Labour and Conservative MPs – into The Independent Group – is unlikely to produce a wholescale realignment of British politics. At least, not yet. However, it has focused minds in Labour’s leadership to be more in touch with the demands of its grass-roots.

The exact shape of Labour’s policy is still characteristically unclear. Regardless of the specifics which will come to light as and when the frontbench can agree on them, Labour’s policy shift is significant. However, a second referendum is still unlikely at this stage and difficult to foresee under the current Prime Minister.

 

ARTICLE 50 EXTENSION?

Almost certain at this point is that March 29th will not be a day where history is made. Whether for technical or political reasons, it now seems all but certain that Article 50 must be extended at the March European Council.

A ‘technical extension’ would assume that the Prime Minister is able to secure a majority for the Withdrawal Agreement in the coming days, giving a cushion for the respective legislation to pass. The UK Attorney General’s shuttling between London and Brussels should be watched closely. If a form can be found that enables him to change his legal advice regarding the ‘indefinite’ nature of the Irish backstop, then some Conservative MPs can be won over.

However, the likely parliamentary removal of no-deal from the options list means that the UK negotiating team must secure some major concessions on the backstop, as the greatest pressure valve – the statutory deadline – is likely to be removed. Concessions that, to date, seem highly unlikely.

Of course, the expectation is that the EU27 would grant a technical extension if the Withdrawal Agreement is adopted, or an extension until the last day of this European Parliamentary term (the start of July) so long as it did not result in further proverbial can-kicking.

However, given the short timescale between the March European Council and the legal date for the UK’s departure, any Member State with a grievance would be able to exercise significant leverage over other policy priorities in order to stave off a devastating veto. It’s an unlikely scenario from responsible governments, but ahead of critical European and several national elections this summer, it cannot be ruled out. Furthermore, a default no-deal scenario following an Article 50 extension would continue to be a possibility, as we enter the summer.

 

Where’s the ERG? 

The staunch Brexiteer wing of the Conservative Party has been less vocal in recent days. In some ways, while PM May’s hand has been weakened by the past 48 hours, vis-à-vis her Brexiteer flank, she may have more leverage on her strategy of winning back Tory supporters. Do not forget that the same ERG MPs who sought to dethrone Theresa May just a few months ago, have since been declaring their support when faced with the alternative of a Corbyn government. Likewise, if faced with the prospect of no Brexit, the Withdrawal Agreement with a few tweaks and a new Attorney General’s legal opinion could be the lesser of two evils, in their eyes.

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