The Brexit nightmare continues as May’s Brexit deal failed spectacularly yet again with the UK parliament 242 to 391. The deal is largely the same that was voted down in late January. The European Union did make some concessions that would have given the UK more legal footing to avert the backstop becoming permanent which is by far the largest obstacle for getting her deal through parliament.
The President of the European Commission, Jean-Claude Junker, has insisted that this is it and “there will be no third chance” However, the EU has buckled before, but it does seem unlikely that much will or could change between now and March 29th. Both the EU's chief Brexit negotiator, Michel Barnier and EU Council President, Donald Tusk have released statements suggesting that the EU has done everything it can to accommodate the UK government’s red lines regarding the withdrawal agreement. It is now entirely up to the UK on how to proceed.
Now that the deal has failed there are two other potential votes. A No Deal Brexit, which is being debated in parliament right now. It is widely expected to fail but is supported by the ERG and some MPs who want to give business some certainty about the future. The government has made this vote a free vote, but given that they whipped for the Brexit deal this is relatively meaningless. If that vote fails as expected, Parliament will vote on Thursday to extend Article 50.
If somehow the unthinkable happens and Parliament approves a No Deal Brexit it still doesn’t mean that this is the end of the road. A longterm deal describing the relationship between the EU and UK will still have to be decided. The UK will crash out of the EU at 11:00 pm on March 29, 2019, and default to WTO rules. The economic effects are predicted to be nothing short of catastrophic though some of the worst effects can probably be staved off for a few weeks. The economic effects will have widespread effects across the weak economies of the EU and likely around the world. A hard Brexit could potentially cause an economic recession that may have spill on effects around the globe. Making matters worse is that the UK, unlike the EU, is wholly unprepared for crashing out as the governments’ full attention has been on the withdrawal agreement. There are thousands of laws and regulations that will have to be implemented to say nothing of the regulatory framework to enforce them.
Even if Parliament does vote for a No Deal Brexit today, it still doesn’t mean that option is off the table. Parliament could also fail to vote to extend Article 50 and fail to provide any other alternative making a No Deal Brexit the default deal. Even if Parliament does approve an Article 50 extension it would require approval from the EU, which is not necessarily a guarantee even if it is likely.
Note: I’ll cover the consequences of an Article 50 extension in Part III of this series