Vote Sets Britain on Path to Hard Brexit
Few had expected Prime Minister Theresa May to win the vote, after she failed to secure concessions on the Irish border question.
LONDON — The pound held relatively steady on Monday evening at $1.31 after members of Parliament torpedoed Theresa May’s Brexit plan for the second time, setting Britain down a rocky road to a hard, unmanaged exit from the European Union.
Before the vote, the FTSE 100 closed up 0.3 percent at 7,151.2. Earlier in the day, the currency had dipped to $1.30 after U.K. attorney general Geoffrey Cox published a statement making clear that May had not won strong enough concessions from the EU about the future of the Irish border, the biggest sticking point in her deal.
After a full day of debate and impassioned pleas from May — whose voice was hoarse from an all-nighter of last-minute negotiating in Strasbourg — members of Parliament shot down her amended withdrawal agreement, 391 to 242.
May said she “profoundly regretted” Parliament’s vote, and remains convinced that a hard Brexit would not be good for the country, which must leave the EU “in an orderly fashion.”
Tuesday night’s defeat was less severe than the one on Jan. 15, which saw MPs vote against her proposal by an overwhelming majority of 230 votes, the biggest government defeat in history.
Given that May has lost, there will be two more votes this week, one set for Wednesday about whether to pull a no-deal Brexit option off the table. If MPs do manage to reject a no-deal Brexit, they’ll gather at the House of Commons one more time, on Thursday, to vote on whether to delay the withdrawal date, which is set for March 29.
If parliamentarians decide to keep a no-deal option on the table, then the U.K. could well have a “hard,” or unmanaged, Brexit. A hard Brexit will likely cause immediate, short-term problems with crossborder trading, movement of people, tariffs and disruption to businesses that have not made plans for such a scenario.
Following Tuesday’s vote, Carolyn Fairbairn, director general of the British business lobby CBI, demanded clarity from the government and Parliament this week. The CBI says it speaks on behalf of 190,000 businesses and calls itself “the British business voice” around the world.
“Enough is enough. This must be the last day of failed politics,” said Fairbairn. “A new approach is needed by all parties. Jobs and livelihoods depend on it. Extending Article 50 to close the door on a March no-deal is now urgent. It should be as short as realistically possible and backed by a clear plan. It’s time for Parliament to stop this circus.”
The sticking point in May’s withdrawal plan is the border between Northern Ireland, which is part of the U.K., and the Republic of Ireland, which is part of the EU. The border is open, meaning that people, goods and services flow freely without any checks.
The big question is what would happen to the Irish border if Britain and the EU cannot hammer out a trade deal after Britain leaves. The wording of the current Brexit deal means that Britain could be stuck in a permanent customs union with the EU. The EU would also have the ultimate power to decide whether Britain can exit the customs union if no trade deals are reached.
A permanent customs union with the EU would defeat the entire purpose of Brexit. It means that Britain would not be able to strike any independent trade deals with international partners.
Before Tuesday’s vote, May told lawmakers she had assurances that the “Irish backstop” will only ever be temporary, so there’s no need to worry. On Tuesday, the attorney general begged to differ, saying that Britain, effectively, remains at the mercy of the EU with regard to the Irish border.
There are other possibilities in addition to a hard Brexit, and nothing is for certain. Even the most knowledgeable — and talkative — pundits admit that the British government will soon be in uncharted territory.
May could decide to resign, or she might be ousted by her own party and replaced by another Conservative who might be able to rally votes for a different sort of deal. May could also call a general election, although she has indicated that it’s not an ideal option, and would only cause more confusion and disruption.
Although it’s unlikely, May could schedule a third vote on her Brexit deal in the hope that MPs miraculously change their minds and back her.
She could also call another referendum, asking the public to vote on her deal or to decide — again — whether or not they want to break from the EU. Whatever happens this week, hard Brexit, a delay or a call for a new government will cause even more uncertainty for consumers and businesses alike.