Market News & Analysis
Brexit: what might happen next
Ken Odeluga September 3, 2019 4:49 PM
Events on 31st October might be the easiest to predict
The latest as of Tuesday 3rd September
- Johnson held a late-morning meeting with rebel Tories, in Downing Street, as a last-ditch effort to dissuade as many as possible not to vote against the government
- Later on Tuesday (likely after 7pm BST), Parliament, which reconvened today following summer recess, will debate and vote (likely after 9pm BST) on a proposal to for MPs to take control of House of Commons business
- If the motion is carried, it would pave the way for a Labour-backed plan to block a no-deal Brexit
- Johnson has said he would interpret any such occurrence as a no-confidence vote, implying he could then call an election, possibly for 14th October, the day after Parliament’s suspension ends
- The defection of a backbench Conservative MP Philip Lee to the Liberal Democrats has ended the Conservative Party’s House of Commons majority, making it more difficult for the government to get anything done, even under normal circumstances
- Sterling is reacting with increasing alarm, plunging below the $1.20 level for the first time since January 2017, before recouping to above that level. It remains fragile
Once again, Brexit proves to be the political crisis that keeps giving. Prime Minister Boris Johnson’s determination to take the UK out of the European Union by 31st October is also a guarantee of more drama to come, and so here we are, up in the air. As such, trying to anticipate what’s going to happen in even over the next few hours, can be difficult, let alone keeping tabs on key Brexit dates in the weeks and months ahead. Like Brexit itself though, resistance seems to be futile. And as ever, a forewarned trader is forearmed trader.
To that end, here are the key dates and points to watch in the process of Britain’s (possible) departure from the European Union.
Tuesday 3rd September 2019
Early on Tuesday afternoon, an application was submitted to the Speaker for an Emergency Debate on the "European Union (Withdrawal)," to be considered the same day. If approved, the debate will take precedence over all other scheduled House of Commons business. MPs would then begin debating a Bill, backed by Labour, immediately. That legislation seeks to force the government to request another extension from the European Union, this time for three months, thus till 31st January 2020.
Wednesday 4rd September 2019
Bill to block a no-deal Brexit
It is likely that a vote on the Bill will take place on Wednesday 4th September. If more than 50% of MPs vote for the Bill, it will need to be spirited through the House of Lords. It would then need to be passed equally as rapidly by the Commons, in order to beat the Parliamentary suspension planned in the week beginning 9th September. There is tonnes of uncertainty surrounding the chances of the Bill succeeding. The government could use delaying tactics to ensure the Bill doesn’t become law before Parliament is suspended. Alternatively, Downing Street could just ignore it. Or it might simply veto EU approval. (Britain still has an EU vote, remember! And all 28 current members need to agree to the Bill’s proposals for them to be approved). Or, the prime minister could call an election, possibly to be held in the week beginning 14th October, the date when Parliament is supposed to reconvene after having been prorogued.
9th September to 12th September
Exactly when this will happen isn’t clear yet. It may not even happen at all, depending on the outcome of several legal challenges, like this one, or this one or whether or not the Bill to block ‘no deal’ is passed. If passed, that could have the effect of precluding a suspension. If the suspension does happen, the earliest date it could begin would be Tuesday 10th September, the latest being Thursday 12th September.
Possible government collapse/caretaker government and general election
If the Bill is defeated, Labour leader Jeremy Corbyn could then go for the ‘nuclear option’ of bringing down the government by tabling a motion of ‘no confidence’. Presumably that vote would take place on or before Thursday 5th September. If the government is defeated, a caretaker government may ensue, in order to delay Brexit from 31st October, for at least—again presumably—three months. But an election would probably swiftly follow such an arrangement, perhaps within a matter of days. The usual practice of a two-week cooling off period would have to be put aside, if the threat of Parliamentary suspension remains by then. An election could therefore happen within 4-7 days of any caretaker government that might follow the prior government’s defeat.
No government collapse/caretaker government but still a general election
If no alternative government can be formed following the Conservative government’s defeat, normal rules would apply. An election must take place, but no sooner than 25 working days after a 14-day cooling off period. If the Conservative government collapses before 10th September, the election could still happen before the 31st October Brexit date, but it would be up Prime Minister Boris Johnson to decide when. Clearly the PM could schedule an election after 31st October. In that event, it is unknown whether Britain would leave the European Union on that date without a deal or not. But the risk of that happening would obviously remain as elevated as it is now, probably more.
Bear in mind that what happens on the dates below depends on what happens in the first half of September. Many date points in the near future could even become moot, depending on what happens in the next few days and weeks.
29th September to 2nd October
Conservative Party conference
The end of Parliament’s Prorogation
The date when Parliament is supposed to reconvene after having been prorogued.
The last scheduled EU summit before the UK’s departure may not have Brexit at the top of its agenda. Whatever has happened beforehand, it is highly likely that little more will be discussed at the meeting (or widely remembered from it) than Brexit.
Brexit Day – (though perhaps not)
This might turn out to be a day of rarely rivalled political importance for the future of the United Kingdom, or something else entirely. If Britain doesn’t leave, it will be another day of relief for Remainers and another day of deepening anger and frustration for Brexit supporters. It’s worth noting that a new five-year political term will begin in Brussels on that day, with a newly appointed European Commission. If a Brexit deal has been agreed by the UK Parliament, it would have to be ratified by Parliament passing it into law. A deal would also require European Parliament’s approval. There’s a possibility that MPs or MEPs could ask the European Court of Justice to examine parts of the Withdrawal Bill. EU member states would also have to approve the deal at ministerial level.
31st December 2020
End of Transition Period
None of the agreements altering the date upon which Britain leaves the European Union have changed the date when the transition period is meant to end. Therefore, before this date, talks that were not permissible whilst the UK was an EU member would have to take place. Over the intervening period, many aspects of EU membership would continue to apply, including free movement between EU countries, but only if Britain has agreed a deal by 31st October or some time afterwards.
31st December 2022
About that backstop…
It will kick in, if an alternative arrangement that avoids a hard border around Ireland has not been agreed by this date. Britain would then be in a customs union with the EU that’s meant to be temporary. Northern Ireland will be pretty much an EU member.
- One certainty at the time of writing is that a Parliamentary suspension in the week beginning 9th September increases the risk that what happens on most of the dates above is not what was initially expected.
- If there has been no successful Bill to delay Brexit and the Conservative government remains in place by next week, chances of a no-deal Brexit will be higher than they are now. The pressure already on sterling and gilt yields would increase, and UK blue-chip shares, which are usually shielded from Brexit turbulence, could then begin to experience the same pain too.
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