What to expect after the vote on the Brexit deal

What to expect after the vote on the Brexit deal

The House of Commons begins on Tuesday a five-day debate on the Brexit withdrawal deal, setting off one of the most decisive few weeks in recent UK political history. With the government expected to lose the key vote on Dec. 11, a key question for financial markets and Prime Minister Theresa May's political future is what the scale of the defeat will be in this scenario.

This is fuelling an expectations management game in Westminster, which is complicated by the fact that a significant number of MPs have still to decide which way to vote. At the most catastrophic end of the spectrum for May, one leading newspaper last week cited former ministers suggesting the government could lose by around 200 votes.

Such a bracing defeat could trigger the political endgame for May, who hasn't ruled out resigning if she loses next week. Even if she decides to stay and fight a second vote, there will be new impetus behind a leadership challenge to her within the Conservative Party; new calls for a general election; and/or a referendum on the Brexit withdrawal deal.

Should May force a second vote, after a very heavy loss on the 11th, it is possible that any significant financial market volatility could sway the minds of more MPs to support her plan. The parallel here might be the Troubled Asset Relief Programme (TARP) legislation in the US in 2008, which was a key component of the-then Bush administration’s measures to address the US sub-prime mortgage crisis.

The legislation was initially defeated in a vote in Congress. However, soon afterward, it was passed on the second attempt after markets tanked.

A rosier scenario for May, which would not just bolster her position but potentially move markets, would be a significantly narrower than anticipated loss, or the extremely narrow possibility of a win next week.  The latter currently appears most unlikely, but nothing can be ruled out in the febrile environment of Westminster politics.

In the event of a narrow loss, it is likely May would seek to go to the European Council meeting of presidents and prime ministers Dec. 13-14 to try to get further concessions. While EU leaders have said there is no scope for further negotiation on the deal, there could be overwhelming incentives for both sides to try to get the agreement “over the line.”

Such a bracing defeat could trigger the political endgame for May, who hasn't ruled out resigning if she loses next week

Andrew Hammond

In the anticipated event that the House of Commons does defeat the government over the Brexit withdrawal deal on the 11th, one further consequence would be for both sides to expedite no-deal preparations. It is in this scenario that UK politics would become even more unpredictable, including the significant possibility of a leadership challenge to May and/or a referendum on the Brexit deal. 

With no time before the end of March to negotiate a completely new Brexit deal, unless the Article 50 process is suspended, one other possibility is that Parliament itself takes more control of the process. Here, there is growing sentiment in the House of Commons for membership of the European Economic Area (EEA) and the European Free Trade Association, known as “Norway Plus.”

What this all underlines is the continuing disagreement within political elites over Brexit, more than two years after the referendum. As the debate over May’s Brexit deal versus the EEA option, and indeed the mooted Canada-type agreement shows, this is not just a Leave versus Remain debate. This is because even those who voted to exit the EU in 2016 did so for diverse and sometimes divergent reasons, which makes fashioning support for a withdrawal agreement very difficult. 

Some Leave voters of an isolationist bent, for instance, focused on perceived costs and constraints of EU membership other than immigration and sovereignty. Meanwhile, a significant slice of the electorate voted to exit as a protest against non-EU issues such as the domestic austerity measures implemented by UK governments since the 2008-2009 financial crisis. 

However, other Leavers voted for an alternative vision of a buccaneering global United Kingdom that could, post-Brexit, allow the nation to secure new ties with countries outside of the EU. It is many of these people – who favour more, not less, international engagement – that now want to see, for instance, new trade deals with key Asian markets like China and India; the Gulf states; and mature markets such as the US and Australia.

So there was not, and still is not, a consensus over any specific version of Brexit. And the continuing divisions within the electorate on these issues are underlined in polls, which now generally show more people favouring EU membership than not, and the country split over whether maintaining access to the European Single Market, or being able to limit migration, should be the key objective in Brexit negotiations. 

Take overall, May is now besieged on multiple fronts, and it appears most unlikely she will win the vote on Dec. 11. This will inject a new element of uncertainty into UK politics, which could yet see her ousted from power, a Brexit withdrawal deal referendum, and/or a general election, in short order.

  • Andrew Hammond is an associate at LSE IDEAS at the London School of Economics
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