Brexit Updates

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Update - 14th March 2019 at 8.30am

14th March
Parliament is likely to vote to seek an extension to Article 50 to prevent a Hard Brexit on 29th March. The EU is expected to grant an extension; however, all 27 members need to agree on this. Given the state of confusion and uncertainty, the EU will want to give time to see what emerges. Our view on this is that an extension of 2-3 months will not be sufficient to reach a consensus in Parliament or the country. If the extension period is substantial or even open-ended, this will increase the political pressure for either a second referendum or even a general election. In this situation, we would expect the government to allow for a second referendum, rather than risk losing a general election. However, as the EU has already stated they would only grant an extension for a particular purpose. So it may be that the government agree to a second referendum and the EU agree to a substantial extension for this to take place, the extension would need to be approximately 12 months.

However, the government appears to be seeking only a short "technical extension" to Article 50. The reason for this is to keep the current deal negotiated with the EU on the table. The government looks likely to bring the deal back to Parliament early next week (18th March onwards). The tactic appears to be to say to those seeking a Hard Brexit - agree this deal or risk no Brexit at all.

As it currently stands the choice appears to be between a Hard Brexit, (and the economic risks that this may cause) and the current deal, (which is not very good for the UK). It is also important to remember that detailed trade talks with the EU will only begin once this, or another deal has been signed.


13th March
Parliament will today vote whether to remove Hard Brexit as an option, or whether to endorse a Hard Brexit. We expect a majority will vote to remove Hard Brexit as an option. However, if this happens the Withdrawal Act 2018 will need to be amended to remove or amend the leave date of 29th March - as this currently stands as the default.

Result - Parliament effectively voted twice to remove a Hard Brexit, however, these votes are not binding on the government. The government can take note of them, but will, in reality, ignore them.


12th March
The Attorney General's advice regarding the backstop arrangements for the Irish border has not changed. The risk of the UK becoming stuck in a protracted or almost permanent customs union with the EU remains.

The advice is published here: https://assets.publishing.service.gov.uk The only clauses that need to be read are clauses 15 & 19.

As a result of this advice, we expect the government to lose the vote this evening. However, we expect the loss to be less than the previous vote, though still significant. The result of the vote was a Government defeat by a majority of 149 votes.


Practical Options
The more practical options are now:

1. A Soft Brexit with the UK remaining in the customs union and accepting the right of free movement as that would be integral.

2. A second referendum to decide the matter again. Ironically, this may be the best bet for those seeking a Hard Brexit as it gives them time to regroup and re-run the first campaign.

However, given the continuing uncertainty businesses do need to plan for - more uncertainty. Though as it currently stands a Hard Brexit is looking less likely.


Longer Term
As currently stands Brexit is still more likely to happen, than not. Assuming that it goes ahead we expect trade deals to proceed, these will take time and will not be as advantageous to the UK and those deals the UK currently has through EU membership - this is just a reality of bargaining power.

Once the deal with the EU is signed we do expect to see the economy improve over the short-term. However, the long-term economic growth will be less than the UK would have if still a member of the EU.

The political implications of Brexit will substantially increase the chances of Scotland holding another independence referendum, (with an increased likelihood of success). Furthermore, we expect at some point within the next ten years for Northern Ireland to hold a "border poll" regarding becoming part of the Republic of Ireland, basically a united Ireland. We see these an inevitable political and constitutional consequences of Brexit.

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