Countdown to Brexit: Deal or no deal?

Two years ago, the consensus view in the US as well as rest of the world was that Hilary Clinton would become US president. Little over two years ago, the consensus view in the UK – as well as in rest of Europe – was that Britain would vote to Remain in the European Union (EU). In both cases, the outcome was just the opposite and equally shocking. Hilary lost to Donald Trump and UK voted to leave the EU. Now, the consensus view in UK is that Britain would eventually get a Brexit deal at the eleventh hour before it leaves EU in March 2019. This is an optimistic assumption which can come true only if one of the sides relents.

It’s nearly two and half years since Britain voted to leave EU to make Britain great all over again. Nineteen months have passed since Article 50 was triggered by the UK. Now, five months remain before a Brexit deal is required to conclude UK’s exit by March 29. Still there is no agreement between the UK and EU over the terms of a deal that satisfies both parties. Several meetings between chief negotiators of both sides have happened. There have been summits and dinner meetings between EU leaders and UK’s prime minister Theresa May. But one contentious issue that’s proved hard to resolve is the Irish border.

Both sides have come down from their earlier tough posturing since the two-year negotiation period began on March 29, 2017, when UK served the withdrawal notice on EU. The period of negotiation can be extended if all 28 members agree. However, all sides are focusing on March 29 as being the key one and Mrs May has also put it into British law. Now, the prime minister says extending transition period is ‘undesirable’, but could help solve Irish border problem. Reports in British media suggest that the prime minister is still struggling with her Brexit negotiations. Last week, Mrs May informed the House of Commons that 95 per cent of the Brexit withdrawal agreement and its protocols are settled. In reality, this is said to be an attempt on her part to demonstrate to anxious MPs in her own party that she is making headway in the increasingly fraught divorce negotiations.

Mrs May’s party is so divided over Brexit that the right-wing Brexiter Conservative MPs are in no mood to settle for anything less than a comprehensive break with the EU – called the hard Brexit. This has made the prime minister’s position weak as she struggles to find a way in the stalled talks with the EU over Irish border, while she heads a minority government and a divided Tory party. Not only have the proponents of a hard Brexit in her party run out of trust in the government’s handling of Brexit but also the British public: On October 20, young voters and Remainers organised an anti-Brexit demonstration called the People’s Vote march in London’s Parliament Square which was attended by around 7 lakh people, demanding a referendum on the final terms of any Brexit deal.

A YouGov opinion poll shows that there is little comfort for the prime minister on Brexit negotiation, since only 1 per cent of UK voters think the negotiations are going ‘very well’, while a huge majority of 71 per cent think that the talks are going ‘badly’. When a government that claims to speak for the public will and has staked so much of its authority on its ability to deliver Brexit, as The Guardian said in a lead comment recently, ‘that 1 per cent is a doom-laden verdict on the public’s lack of confidence’. While at home, the prime minister is fighting her own survival battle, holding off a backbench rebellion over the Irish border, in Brussels she is struggling to cross the ‘last hurdle’ (the Irish border, again), which is still proving a significant obstacle. The gathering of the EU leaders in Brussels two weeks ago was supposed to bring clarity to the Brexit negotiation. But the summit ended without the two sides coming to terms on the next steps in the Brexit process, though the countdown to Brexit has begun.

The EU and UK want to prevent a hard border between the Northern Ireland and the Republic of Ireland. The former is part of the UK while the latter is a member of EU. Since the UK plans to leave the customs union and the single market, there could be extra checks on goods moving from the EU to the UK and vice versa. This poses the question of where the checks should take place. The EU proposed that the checks happen at the Irish sea. Northern Irish party, DUP, which supports Prime Minister May in parliament, is not in favour of such a solution because DUP feels it divides Northern Ireland from the rest of UK. Under the current proposal, Northern Ireland would remain in the single market for goods. Incidentally, it had also voted to remain in the EU in Brexit referendum.

In order to prevent UK crashing out of the EU without a deal, Mrs May has proposed a temporary customs union – called the ‘Irish backstop’ – till a permanent solution is found to Irish border. But EU has rejected her idea. The proposal was also not well-received by her party members. Some of them believe that a customs union, even if temporary, will restrict UK’s ability to strike new trade deals. Extending the transition period beyond December 2020, as suggested by EU’s chief negotiator Michel Barnier, could help the two sides reach a trade deal and avoid using Irish backstop that is currently dividing both sides. But UK lawmakers don’t seem to be in favour of it either because during transition, UK will have to comply with EU rules without having any voting rights in EU policymaking.

With about five months to go, time is running out before the UK and EU resolve their differences and ratify the exit agreement in their respective parliaments. The ratification process could prove to be a problem for Mrs May if she does not have majority in parliament to get the exit agreement approved. Without approval, the UK could crash out of EU in March, which will impact businesses, trade, consumers and investors on both sides. As UK approaches the cliff-edge, four possibilities are being speculated: a change of leadership of the Tory party, a new general election, a new Brexit referendum or a no-deal Brexit.