December 2018 has been an eventful month for the Brexit process. We’ve seen the Government deferring the "meaningful vote" planned for 11 December to allow time to seek further assurances from the EU on the Northern Ireland “backstop”. On 12 December the Prime Minister faced a confidence vote from her own party, which she won by 200 to 117, giving some reassurance but raising ongoing concerns about her ability to get a deal through the House. And the Prime Minister attended the EU on 13-14 December to discuss the concerns raised regarding the backstop. However, the changes to the proposed deal that might have been hoped for did not result from this meeting.
|The Backstop||The ‘backstop’ will automatically kick-in if there's no deal at the end of the extended transition. In essence, the ‘backstop’ would mean the UK staying in a customs union with the EU with Northern Ireland staying fully aligned to the single market on relevant rules, without any scope for divergence.|
|The Meaningful Vote||The meaningful vote is the name that has been given to the vote referred to in Section 13 of the European Union (Withdrawal) Act 2018, and is the mechanism by which Parliament will approve, or otherwise, the outcome of the negotiations with the EU.|
So, with the countdown from 100 days to go now on, what can we expect for the early part of 2019 as we move closer towards the 29 March deadline?
On 17 December the Prime Minister confirmed that she intends to bring her deal back to Parliament for debate the week commencing 7 January, with a Meaningful Vote the following week.
If MPs vote against the deal then the Prime Minister has 21 calendar days to present to the House of Commons her planned next steps. In reality we expect she would act quickly to discuss options with MPs, before potentially asking MPs to vote again. If the vote does not pass a second time the process is repeated, again with a maximum of 21 days for her to present her plans.
It is worth remembering that if the deal fails to pass through the UK Parliament on one or more occasions there may be a confidence vote in the Government or the Prime Minister and from this a potential General Election. However, under the Fixed Term Parliament Act 2011, there are limited situations in which an early General Election may be called, including where there is a motion of no confidence passed in the Government by a two thirds majority, and no alternative Government can be formed within 14 days.
Should Labour table a motion of no confidence in the Government before the House rises for the recess we will see a significant increase in uncertainty levels, with the possibility of a general election.
On 20 December the UK Parliament goes on Christmas recess, and will not sit again until 7 January 2019.
There is, of course, a third option to deal or no deal, that of "No Brexit" following a People’s Vote (i.e. a second referendum). It is estimated that approximately 22 weeks are needed to hold an effective referendum, once the primary legislation has been passed. This would mean a referendum potentially sometime in late May 2019, which would require the EU to agree to extend the Article 50 date. Securing a referendum, and being confident of its outcome, are highly uncertain propositions.
What happens in January 2019 is reliant on whether the UK Parliament has passed the deal or not by that stage. If the deal has been approved then the Government will introduce the EU (Withdrawal Agreement) Bill, as well as initiating the ratification processes set out in the Constitutional Reform and Governance Act 2010. The EU (Withdrawal Agreement) Bill will enshrine the Withdrawal Agreement into UK law and will provide for the transitional period, whilst the ratification process is required as the Withdrawal Agreement is an international treaty. The Bill must receive Royal Assent and must be completed by 29 March 2019 when the UK officially leaves the EU; formal notification of ratification must be made to the European Commission before the exit date. This presents another series of moments when MPs unhappy with the deal may seek to influence the outcome.
In the European Parliament there would be a similar ratification process. It must be presented to the EU Parliament and a simple majority reached. It is then passed to the European Council and 20 out of the 27 countries, representing at least 65% of the population, must agree to it (known as a “super-qualified majority”).
The latest possible date that the parliamentary processes to enact the EU (Withdrawal Agreement) Bill and ratify the treaty can commence, with sufficient time remaining to meet the 29th March deadline is mid February 2019 (most likely 22nd). By this point, we can expect to have clarity on whether the UK Parliament will be progressing with the legislation to support the implementation of the deal, or alternative legislation that may be required to minimise disruption in a no deal scenario. If there isn’t a resolution of negotiations it is possible that there might be an extension of Article 50, for instance where more time would allow for an orderly exit into a deal scenario. It is worth noting that an extension would be needed if there were a General Election or second referendum held in the UK to allow sufficient time for these to take place. This would need to be negotiated with the EU, and is by no means guaranteed.
The final deadline that we must all have our eyes set on is 11pm (GMT) on 29 March 2019 - the time that the UK will officially leave the EU, with or without a deal. With that date now just 100 days away and a number of political obstacles still to overcome, this may seem insurmountable but on balance we still believe the UK will exit the EU with a negotiated deal. However, our advice to all businesses is to continue implementing contingency plans for a no deal outcome, and increase this activity the closer we come to 29 March without a legally binding deal.
If a negotiated exit has been successfully achieved then the UK will leave the EU as planned and trade talks will begin. These are expected to run until at least Summer 2020.
Director of Political Relations, PwC United Kingdom
Tel: +44 (0)7711 562 491
Senior Adviser, PwC United Kingdom
Tel: +44 (0)7803 726 179