Brexit - May's game of chicken

The debate and votes in the House of Commons yesterday gave no new certainty to the Brexit process, but they did increase the chances of a disorderly withdrawal from the EU on 29 March.

A majority of MPs voted in favour of an amendment by Sir Graham Brady, chairman of the Conservatives 1922 Committee of backbench MPs, giving support for Theresa May’s Withdrawal Agreement, provided that alternative arrangements to the Irish backstop were found.

In response, Theresa May said she will return to Brussels, seeking to reopen the Withdrawal Agreement to change the provisions of the backstop. She will then put forward a revised Withdrawal Agreement for a second “meaningful vote” in Parliament on 14th February.

This approach represents an astonishing volte-face from the Prime Minister who, prior to the first “meaningful vote”, was adamant that the Withdrawal Agreement (including the Irish backstop) was the only deal in town – if Parliament rejected it, the only alternatives were either no deal or no Brexit.

The Prime Minister has decided she has no other option but to make the backstop more palatable to her Eurosceptic wing. This is in the face of growing momentum from elements within her own party (and from Opposition parties to explore softer Brexit options such as a Customs Union/EEA membership or a second referendum) and to wrest control of the Brexit process from the government.

Parliamentary voting strengthened her hand in two ways. First, the approval of the Brady amendment provided the first tangible sign that Parliament can find a majority to support a specific form of Brexit (albeit unclear what “alternative arrangements” are acceptable). The Prime Minister can then demonstrate to Brussels that she can deliver Parliamentary support for a deal, but only if the EU moves on the backstop.

Secondly, that other amendments that would have given Parliament a greater role in deciding the course of Brexit were rejected, at least for the time being. Government hopes that the defeat of these amendments will urge EU minds to realise that if an acceptable backstop alternative fails to materialise, then the most likely outcome will be a hard Brexit on 29th March.

This is obviously a high-risk strategy. By removing the option of extending Article 50 (for now), and reducing Parliament’s ability to propose and debate on alternative Brexit paths, Theresa May is challenging the EU to ‘a game of chicken’: either it backs down and changes the backstop to meet the demands of her Brexiteer backbenchers, or it faces the real possibility of a no-deal collision on 29th March.

So far, the EU has responsibly maintained a high degree of discipline in its approach to negotiations. The Commission has been adamant that the Withdrawal Agreement is now closed and will not be re-opened. Member States led by Ireland and France have insisted the same, and in particular, have stated that the Irish backstop must remain, it must be binding and not time-constrained. 

However, the EU also faces an uncomfortable dilemma: the more rigidly it sticks to the Irish backstop proposals (solely intended to come into force absent of a trade agreement ending 2020), the more likely it is that UK Parliament will reject the entire deal, thus precipitating the exact problems the backstop was designed to avoid in March 2019. Hence, despite the fact the EU has consistently said ‘no’, ’non’ and ‘nein’ in reopening the Withdrawal Agreement, we cannot yet be sure that position will hold.

Even if the EU doesn’t blink and refuses to make changes to the backstop, all might not be lost for the Prime Minister. She will still have one more chance to play her ‘game of chicken’, but this time - with her own Parliament. It is possible that on 14th February, with just six weeks departure, Theresa May will be able to persuade enough MPs that the EU is not bluffing and that her deal really is the best achievable and the only alternative to ‘no-deal departure chaos’.

With only two months left on the clock, we are no closer to discovering what the terms of the departure will be. What we do know however, is that despite the view of a majority of MPs, businesses and the EU, the no-deal Brexit scenario remains a real prospect - and this is the only outcome that businesses can sensibly plan for.

 

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