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Death of UK Brexit Deal Gives Brussels Three Options

Maya Mandzikasvili | Jan. 16, 2019
Death of UK Brexit Deal Gives Brussels Three Options

January 16, 2019, | AtoZ Markets - The British government’s plan of leaving EU was denied in Parliament - 73 days before the date when Britain should officially withdraw the European Union. How Brussels reacted to such circumstances and what strategy the UK Prime Minister Teresa May has to choose to avoid one more fiasco?

What happened behind the walls of the British parliament?

In support of the deal with the European Union proposed by Prime Minister Theresa May, 202 representatives of the House of Commons spoke out, 432 deputies voted against the agreement. The parliamentarians also rejected the amendment, according to which Britain could unilaterally reject the plan agreed with Brussels on the border of Northern Ireland (the region of the United Kingdom that leaves the EU) and the Republic of Ireland, a member of the European Union. 600 lawmakers were against the amendment, only 24 supported it.

The vote that took place on Tuesday, in general opinion, was a major defeat of the British prime minister.

May tried to convince the deputies (including from her own Conservative Party) to give a chance to the agreement that her government had achieved after months of negotiations with the EU.

Mae's arguments stated that the failure of her plan could lead to abandoning Brexit or to the fact that Britain would leave the EU without agreements — were intended to affect those who do not want Brexit and those who criticized the Prime Minister for not being a sufficiently decisive divorce "with the European Union. Not only the parliamentary opposition came out against the plan, but also a part of May party members. The leader of the Labor Party, Jeremy Corbin, submitted to Parliament a proposal to consider the question of no confidence in the government. The discussion of a vote of no confidence will be held in parliament on Wednesday.

What will happen in the near future?

The government will have three days to offer "Plan B" and try to get additional EU guarantees. “Plan B” vote may take place on January 21

If this plan is also rejected, the parliament may try to take control of the Brexit process and reach its own compromise agreement to prevent Britain from leaving the EU without an agreement.

This option, according to many analysts, will have serious consequences for the country's economy and lead to mass protests, supply disruptions due to problems with transport communication with the EU and the restoration of the real border with Ireland, which is a key problem of Brexit. Proponents of the "hard" Brexit, in other words leaving EU without any agreements, are confident that it will be much softer than their opponents think.

Brussels stays calm about Brexit agreement delay

Nevertheless, the events mentioned may not be a shock to the office of the main negotiator for Europe, Michel Barnier, in Brussels. Uncertainty about Britain’s withdrawal from the EU has hung over the negotiations for more than two years, and the main reaction of the EU will again wait for the UK to make a decision. There are three main strategies Teresa May might choose to finish Brexit saga.

1. Teresa May will have to negotiate a new deal on Brexit in Brussels.

Even after convincing the EU earlier this week to publish another encouraging statement about Irish support, the Prime Minister may want to demonstrate her intention to try everything to achieve a deal acceptable to parliament. But the EU has already made it clear that there will be no revision of the deal - and it probably knows that it will be pointless to ask. According to the analysts, the probability of this scenario is  1/10

2. The UK might have to follow the so-called Norway's scenario. Voting and the subsequent debate will demonstrate a strong preference for this version of Brexit. In the political expert's opinion, Brussels has no reason to object to such plan if it feels that there is a strong political impetus in London for this. If Britain chooses this strategy, the country will have to follow rules, namely:

  • first join the European Free Trade Association, a group of four small countries - Iceland, Liechtenstein, Norway, and Switzerland.
  • request participation in the European Economic Area, which implies participation in the single market, and not in the Customs Union.
  • it is unclear whether the UK will then have to leave the EU, which implies the absence of a deal with Brexit on a scheduled date before returning to the single market. In this case, Brussels is likely to propose an extension of Article 50. The question is how long it will take for the UK to agree on its membership in the EFTA. The probability of such scenario is 2/10

3. The UK is heading either to a new government or to a referendum. The question of elections to the European Parliament to be held at the end of May will immediately arise: if the UK is still a member by that time, it will have to send members of the European Parliament to the newly elected authority.

But since the new parliament and the new commission will take over in the fall, Brussels is trying to prevent the work of the new regulators from being “contaminated by the Brexit virus,” the diplomat said.

The most likely option for Brussels under this scenario of increased uncertainty would be the adoption of an extension of Article 50 which sets out how an EU country might voluntarily leave the union. This decision must be approved by unanimous consent of the EU-27, with a strict deadline and a warning that there will be no more extensions.

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Tags EU Brexit
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.