In Brexit’s endgame, anything is still possible

This article first appeared in The Edge Financial Daily, on August 23, 2018.
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AS negotiators from the UK and the European Union meet in Brussels this week, Brexit is said to be entering its endgame. This isn’t an ordinary endgame though: All the major pieces are still on the board and pretty much the full range of potential outcomes — from no deal to no Brexit, and everything in between — remain live possibilities. Mapping the potential outcomes isn’t easy.

Since the two-year countdown to Brexit ends on March 29 and any deal requires UK and EU parliamentary approvals, the window for a bargain effectively closes in the next few months. Either Britain will leave the EU with a negotiated agreement; or it will exit with no deal at all, upending a vast array of trading relationships and complicating future negotiations with the EU and other countries.

A new paper from the Institute for Government helpfully lays out five scenarios that could unfold this autumn. The upshot is that “the risks of either a deliberate or an accidental no deal are quite high, given the apparent stalemate in the negotiations, the precariousness of the prime minister’s parliamentary position and the defaults now incorporated in the system.”

Of the five scenarios, only one envisions a relatively smooth route to an orderly Brexit: It posits a successfully negotiated withdrawal agreement and parliamentary approval. The other four carry a very high risk of a no-deal Brexit.

Prime Minister Theresa May could, for example, strike a deal that parliament then rejects on the grounds that it leaves Britain a “vassal state,” as Brexiter Jacob Rees-Mogg put it. May could try to renegotiate, of course. But she might run out of time or get turned back by Brussels, and parliament may still reject whatever alternative she proposes.

Although the bias in parliament is clearly to have a deal, there’s no agreement on what kind. Even if May fails to reach an agreement and parliament rejects the no-deal option, it’s not clear how the legislature could get to a better outcome. And even if parliament did manage to nudge the government back to the negotiating table, it’s not clear that it would get an approvable option back.

What makes this particularly devilish is that the old Leave versus Remain division has effectively become a deal or no-deal division. There are many Leavers who don’t like May’s proposed deal, but who would still favour an agreement of some kind because they think parliament might reject a no-deal result, throwing Brexit itself into doubt. Then there are Remainers who don’t like May’s proposal but who would support it as preferable to the cost and chaos of no deal at all.

Against that possible coalition of the disgruntled but willing is a potentially stronger force: Remainers who oppose May’s deal because they find it too great a compromise and hope that they can cancel Brexit altogether; and Leavers like Rees-Mogg who oppose it as a sellout.

If that isn’t confusing enough, party affiliation is no guide here. There are Labour Party members of parliament (MPs) whose main priority is ensuring Britain doesn’t leave without a deal; and others whose chief interest is in overthrowing the government, whatever happens with Brexit. While the prime minister has won key votes with the help of some Labour Leavers, it’s unclear if she’ll be able to count on them.

It’s the same, pretty much, on the Tory side: There are those who want to get over the line on Brexit with a deal of some sort, those who see May’s proposed deal as an economy killer, and others for whom only a total break with all EU structures is acceptable and who believe May must be relieved of her position in the process. The Conservative Party conference in September is likely to be a beauty parade of would-be prime ministers touting their alternative Brexit visions.

And yet even these scenarios don’t account for the full range of possibilities. Say May gets an agreement. Parliament must pass a motion to endorse it and then must pass the Withdrawal Agreement Bill for it to go into effect. But disgruntled members could at any point seek to wreck the deal or hamstring future talks with amendments.

Not enough scenarios? If parliament rejects the deal, the government could seek to extend the Article 50 deadline (which requires unanimous EU approval) to allow more time to renegotiate. While unlikely, MPs could also try to force the government to call a second referendum, a route that is fraught with problems of its own. And then there’s EU approval: The European Council needs to obtain the European Parliament’s approval (by a simple majority) before it can conclude the withdrawal agreement.

Expect a frenzy of activity from both deal and no-deal camps. Nigel Farage, the former leader of the UK Independence Party, has announced a grassroots tour to oppose May’s Brexit plan. Another hardliner, Aaron Banks, is encouraging Brexiters to join the Tories in the hope of bouncing May into a hardline Brexit or replacing her. On the other side, there will likely be more anti-Brexit protests and pleas from businesses to minimise the pain.

A Brexit soft landing, it seems, is as much a question of luck as negotiating skill at this point. Anyone who thinks otherwise might try this simulation from Bloomberg News. I did and things kept blowing up. — Bloomberg

 

Therese Raphael writes editorials on European politics and economics for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.