Wednesday, December 19, 2018

100 days 'til Brexit, but will parliament "bottle it"?

With 100 days to go and with the 'meaningful vote' on Theresa May's 'deal', or EU Withdrawal Agreement, postponed until mid January, Brexit has now come down to a game of bluff and threats.

Theresa May and her cabinet have begun plans for a no-deal Brexit and in so doing is essentially threatening parliament to vote for her deal or crash out of the EU and fall back on WTO rules.

Some have called it a game of chicken, but it could also be regarded as a form of blackmail.

With the government appearing to be serious in following through with a no-deal Brexit should it lose the vote on May's deal organisations representing hundreds of thousands of firms have expressed concern saying a no-deal would bring "severe dislocation and disruption".

"Businesses have been watching in horror as politicians have focused on factional disputes rather than practical steps that business needs to move forward," a statement from the CBI [British Chambers of Commerce], Institute of Directors, Federation of Small Businesses and the EEF, the manufacturers' organisation, said [Sky News].

Amongst many employers there is a concern that much needed immigrant worker will refrain from coming to the UK [Guardian / BBC].

The government have said they have ramped up contingency plans putting aside £2 billion of public money [], putting troops on standby [CNN] and buying up refrigerators to stockpile medicine [iNews / Guardian].

Whilst the likes of Iain Duncan Smith and Jacob Rees-Mogg insist a no-deal is of little concern, there is a general consensus that a no-deal Brexit would be a painful experience [Politico / Guardian / NBC].

Even with the slightly softer approach offered by the EU as it published updated preparedness and contingency plans, a no-deal will still create significant problems and will only defer much of the chaos for months [Europa / BBC / FT].

Given May's deal is rejected, there are a few that believe that Brexit is dead. Some feel that a voting down of Theresa May's deal will force a so-called People's Vote. This could still go either way and there is a fear amongst some that the whole Brexit shambles could become an intractable political hot potato.

But while there are only a few expressing such a view, there is a feeling that the Tory government and parliament may "bottle it" and retract Article 50 as at least one commentator has speculated might happen [Twitter].

May's slogans of Brexit Means Brexit, No Deal is Better Than a Bad Deal and What We Want is a Red, White & Blue Brexit all seem rather hollow after more than 600 days since the EU referendum. With 100 days to go until Brexit day and only a little over 70 days when parliament is likely to vote down May's 'deal' there may be a reality check within May's cabinet.

Will May really want to own a hard Brexit with all the economic fallout that it would bring with it?

The next general election in the United Kingdom is scheduled to be held on 5th May 2022 under the Fixed-term Parliaments Act 2011. Thus the Tory government would have a breathing space to bridge the divides and tackle the anger that would likely arise from the hardcore eurosceptics if it did abandon Brexit.

The Tory party's main concern is about retaining power. Should they follow through with a no-deal, the chaos that will follow is very likely to result in the Tory party falling in 2022. Indeed it might even face a vote of confidence before then should things go very badly.

If, on the other hand, it seizes the moment and rescinds Article 50, there is a chance it could ride the storm and maintain support. May is set to step down before 2022 thus putting into place a new leader which could, potentially, allow the party to rebuild and make itself re-electable.

There is no guarantee any of this will happen, but the odds are certainly going up that Brexit may not happen at all [Atlantic Council / Mirror] .

tvnewswatch, London, UK

Tuesday, December 18, 2018

UK government plans for no-deal Brexit

There seems to be no model put forward by any economist that shows Britain will be better off after Brexit. Indeed every forecast, whilst numbers vary, show Britain will be poorer under every type of Brexit compared with staying in the EU.

Yet Theresa May continues on her course to deliver Brexit, saying that not to do so would be a betrayal of the people. And with her deal secured with the EU all but dead it appears she is planning for a no-deal Brexit.

Last month both the the Chancellor of the Exchequer Philip Hammond and the Bank of England's Mark Carney both warned on the catastrophic risks of a no-deal Brexit. But much of the media and quite a number of politicians seem to be dismissing such predictions as a re-run of so-called 'project fear'.

According to the Chancellor of the Exchequer Philip Hammond all forms of Brexit would make the UK worse off but Theresa May's plan was the least damaging option.

Analysis of the prime minister's Brexit deal shows the economy will be "slightly smaller", he told BBC Radio 4's Today programme on Wednesday 28th November 2018.

But it was not just about the economy, he argued, and her plan would deliver "political benefits" as well.

His comments came as the government was due to publish its economic analysis on the long-term effects of Brexit on the UK.

The Treasury was to set out various scenarios - with the Daily Telegraph saying it would predict £150bn in lost output over 15 years under no deal, with Theresa May's plan costing £40bn [BBC / Sky News / City AM].

Speaking on another radio station the chancellor said, "Remaining in the EU leaves the economy slightly larger."

David Henig, Director of the UK Trade Policy Project and a leading expert on the development of UK Trade Policy post Brexit, speaking on LBC radio said government forecasts concerning the UK economy, should it accept Theresa May's deal, amounted to mere "aspirations" since the deal was only a divorce agreement and no trade deals have yet to be negotiated and signed.

Indeed even the so-called transition period that the Withdrawal Agreement allows would be unlikely to give the UK enough time to strike enough required trade deals to mitigate a significant economic decline.

There will throughout the transition period be yet more uncertainty during which more business may well leave the UK.

A no deal scenario could however be much, much worse. Echoing what Hammond had said earlier in the day the Bank of England's Mark Carney later held a press conference which painted a very bleak picture should the UK crash out.

A no deal Brexit could send the pound plunging and trigger a worse recession than the financial crisis, the Bank of England warned.

It said the UK economy could shrink by 8% in the immediate aftermath if there was no transition period, while house prices could fall by almost a third.

The Bank of England also warned the pound could fall by a quarter [BBCSky News / Metro].

The warnings came only days before parliament was due to vote on the Withdrawal Agreement secured with the EU27. But only hours before that vote Theresa May cancelled the vote sending the pound to its lowest level in more than 18 months [Guardian].

As well as creating economic uncertainty the move angered many MPs. Labour's Jeremy Corbyn, who accused Mrs May of "losing control of events" and "disregarding" MPs, was granted an emergency debate in the Commons on Tuesday while Commons Speaker John Bercow said the government's handling of the issue had been "regrettable" [BBC]. 

Having failed to obtain any changes to her deal from the EU Theresa May then faced a confidence vote after the 1922 committee received the required 48 letters. May survived as nearly two thirds of her party backed her. But May's battles are far from over.

There still essentially remain only three options. Theresa May's 'deal', no-deal or no Brexit.

But with May continually dismissing a People's Vote or the rescinding of Article 50 only her 'deal' or a cliff-edge no-deal Brexit seems to be the only options on the table.

The situation ramped up further a week after May cancelled the meaningful vote as she gathered together cabinet members to discuss plans for a no-deal Brexit [BBC].

The official position from the government is that a no-deal Brexit was not preferable to May's 'deal', but that it would "be irresponsible" not to plan for such an eventuality.

"The government's priority is to secure a deal," the Brexit secretary Stephen Barclay told Sky News. But, he added, there were plans being made for a no-deal.

With 14 weeks to go the Brexit secretary Stephen Barclay said businesses needed to prepare for a no-deal and read the preparedness notices the government had published.

Andrea Leadsom reiterated his comments saying a no-deal was a distinct possibility. Asked if a no-deal might happen she responded by saying, "it certainly is, if all else fails."

But not everyone is happy with the contingency plans. David Gauke has reportedly described a managed no-deal as a "unicorn that needs to be slaughtered" [Sky News]. It has already been reported that the justice secretary could resign from his cabinet position if Theresa May's government seeks a no-deal [FT]. Others too have been outspoken about a no-deal option. Amber Rudd has made it clear she won't accept a no-deal, telling Cabinet, "Just because you put a seat belt on, it doesn't mean you should crash the car"

The cost of preparing for a no-deal is reportedly around £2 billion [Business Insider].

But the real cost to the UK economy, 'managed' or otherwise could be far more costly. And with no help form the EU, a no-deal Brexit will be far from managed [Bloomberg].

The contingency plans being made may be too little too late to mitigate the disaster that would happen should Britain crash out. There will more than 750 treaties currently signed with the EU that will cease to apply which cover everything from trade to rules on medicines and flights. Fourteen weeks is simply not enough time to rework, negotiate and sign such a large amount of treaties, many of which are not covered by WTO rules.

Theresa May could be attempting a game of bluff, essentially blackmailing MPs to sign up to her 'deal' under the threat that the only alternative would be a no-deal Brexit.

Given the damage that a no-deal Brexit could do, many MPs might feel obliged to sign up to May's deal. But there are many MP's who could play the same game and force May into calling a people's vote should her deal fail to pass.

As the cabinet gathered today there were only 101 days until Brexit day.  The Prime Minister has announced that it will instead be held in the week beginning on the 14th January. That will leave only 74 days before Britain would be due to leave the EU.

All signs are that May's deal is set to fail. And with only 10 weeks to go there would be little time to have a second referendum or people's vote unless the EU offered an extension to Article 50.

In such circumstances it is possible and even likely that Britain will crash out. And while the government says they are preparing for such an eventuality, no-one is truly prepared for the chaos that will ensue.

There will be those who will say the predicted chaos is merely scaremongering. But this seems to completely ignore a huge number of preparedness notices issued by both the EU and Britain.

tvnewswatch, London, UK