Daily Brexit update: ‘Meaningful Vote’ – Four things to Watch

‘Meaningful vote’ Take Two is now just over 24 hours away.


Daily Brexit update: ‘Meaningful Vote’ – Four things to Watch

‘Meaningful vote’ Take Two is now just over 24 hours away. Indeed, unlike the days preceding Downing Street’s last opportunity to seek parliamentary support for the EU Withdrawal Bill, Prime Minister Theresa May has been all over the airwaves and press in a last-ditch effort to win support for the deal in the face of almost overwhelming indications that it will be voted down. She didn’t say anything new, again attempting to scare Brexit-supporting conservative rebels into line by warning that “the more likely outcome” from a lack of support “is a paralysis in parliament that risks there being no Brexit." The EU played good cop, releasing a letter providing assurances on some of the most controversial aspects of the deal, especially the Northern Ireland backstop. The EU stood by a commitment to reach a trade deal by 2020’s end thereby avoiding need of the backstop. It was also open to extending the transition period if no trade agreement has been reached by deadline, to avoid triggering backstop arrangements.

Still, the letter and Theresa May’s appearances, another one of which is due in Parliament as I write, are unlikely to change many MPs’ minds. As such, the Bill will probably still be defeated. This will be followed by huge uncertainty as to what will happen to Brexit and the government afterwards. The myriad combinations of possible events make predicting what happens next impossible, but there are four themes worth watching.

  1. It is assumed that the Bill will be defeated, but the final tally of votes will be instructive as to how much momentum exists to challenge the legislative agenda and the government in the wake of Tuesday’s proceedings. Few MPs who are not government ministers or whips (about 100) and thus obliged to support the Bill have said how they intend to vote. Only 29 of 650 MPs have said they’ll support it. 69, including 14 Conservatives said they will oppose it. Excluding the 100 ministers/whips, how close the vote against the Bill is to the 521 of those who appear set to vote ‘no’ could be critical. If it’s above—suggesting prior supporters switched­­­­­­—the chance of a government collapse would look higher, since MPs who might support a vote of no confidence would be increased.
  2. Since opposition to a no-deal Brexit is not enough to stop it, Britain could still leave the European Union regardless of the vote outcome. There needs to be a clear majority for an alternative deal. But formulating a new deal would take time, so a delayed departure date would seem to be the logical gambit of opponents of the current deal. Only new legislation can change the date of Brexit. The Article 50 process also requires a unanimous agreement from EU member states. It makes sense to watch for signs that politicians are moving towards tabling emergency legislation that could change the date of Brexit.
  3. A large majority vote could also extend the exit process. This would be purely political and not legally binding on the government, but Downing Street would find a decisive vote difficult to resist. So again, watch out for motions calling for an extension of the process
  4. ‘Speaker’s Prerogative’: House of Commons Speaker John Bercow caused equal amounts of alarm and excitement last week by flagging that he might not be bound by convention in the days and weeks ahead, as is his prerogative given the lack of a written constitution. This suggests he could deploy an obligation to maintain an orderly process of government even whilst remaining impartial at all times. Depending on how to interprets that responsibility, chances of politicians wishing to disrupt Brexit could benefit significantly.

Join market analyst Fiona Cincotta as she looks at how the vote could unfold and the potential market impact. Register now: 

https://www.cityindex.co.uk/market-outlook-webinars/

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.