Public Policy

June 5, 2018

Brexit contingency planning: is June a turning point?

Brexit Image

For some businesses affected by Brexit, the decision over whether or not to implement contingency plans will have already been made. For others waiting for more certainty over the eventual outcome, June 2018 could be a fascinating month.

With the EU Withdrawal Bill due to return to the House of Commons next week and the EU Council (Heads of State from the Member countries) meeting set to take place at the end of the month, June is expected to be the most unpredictable month in the Brexit negotiations so far – at least from a UK perspective.

So, if you can afford to wait for a month before making a decision, do. There is a prospect of more clarity by the end of June.

If this Government has its way regarding these amendments intended to constrain the future trading relationship, it will avoid being bound by a decision of Parliament to seek either a customs union or to remain in the EEA. However, it will come down to a relatively small number of votes and it could go either way. Governments usually win votes in the Commons. However, the Government does not have a majority, and Conservative MPs thinking of voting against the Government for ideological reasons are less likely to be swayed than on other votes. In short, one should not predict which way MPs will vote.

Voting on the EU Withdrawal Bill

The House of Lords amendments to the EU Withdrawal Bill – including the requirements on the Government to negotiate the UK’s participation in a customs union with the EU, and to negotiate continued membership of the EEA (“the Norway option”) – are expected to be debated and voted on by MPs on Tuesday 12th June, on which day Theresa May will seek to overturn all 15 Lords defeats on her flagship Brexit legislation.

Effectively, what Parliament decides will bind this Government’s hands regarding its position on Brexit. More than 20 Conservative MPs have been identified as potential customs union rebels, with 13 of these required to vote against the Party line in order to defeat the Government. On the other side, some Labour MPs may vote against their leadership which could balance this out to some extent. Ultimately, it will come down to how many MPs are prepared to defy their parties’ leadership.

Should the Government lose the key votes (EEA and/or customs union, removing the precise date of Brexit – 29 March 2019 – from its wording, and the Irish border) – it remains unclear as to how pro-Brexit MPs will respond to what is ultimately a violation of at least one of their Brexit ‘red lines’. They may indeed gather enough support for a leadership challenge as has been reported. However, even if this was to happen, Theresa May could, without an obvious other candidate to rally both sides of the Parliamentary Party, be re-elected as Conservative leader. However, should the scenario occur of a leadership challenge, we may in fact have to wait yet longer for clarity.

European Council

Following the votes on the EU Withdrawal Bill, the Government will have to quickly settle its position on a) the Irish border and b) the basic demands of a future trading relationship with the EU, ahead of the European Council meeting on 28th/29th June. At the Council meeting, EU leaders will expect to see the UK put forward a credible, coherent offer (though some have suggested the UK Government may try to delay the big decisions again). To allow enough time for the EU Commission and other EU Member States to review the UK’s position ahead of the meeting, the latest the UK Government will conceivably be able publish its stance (as will be set out in a Brexit White Paper) is 21st June.

In summary

With the big Commons votes, the UK is to publish its most detailed Brexit position paper yet, and the EU Council meeting at the end of the month, we have an incredibly packed political agenda in June. It may be fluid and fast-moving, especially if the Government loses key votes and is bound by the House of Commons to negotiate for something it has up to now not wanted to push for.