Brexit in the balance | City A.M.
The Brexit negotiations are stuck in a stalemate.
The EU is playing hardball on everything from the UK’s participation in the Galileo satellite navigation programme and the European Arrest Warrant to the Irish border issue.
It scents weakness. Confusion and chaos reign in the UK government, where internal disagreements over Brexit have become paralysing.
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With 10 months to go until Britain is, formally at least, meant to leave the EU, how is Brexit likely to play out? There are at least five possible scenarios, to which probabilities can be assigned.
Theresa May pulls a Brexit deal out of a hat (20 per cent)
The Prime Minister overcomes opposition within her own party, gains parliamentary approval for a largely unamended EU (Withdrawal) Bill, and persuades EU negotiators to fudge the Irish border issue pending the negotiation of a comprehensive free trade agreement.
May has managed this trick twice before. In December 2017 she brokered a deal to conclude “first stage” negotiations. In March 2018, in return for substantial concessions, she got the EU to agree the terms of a “status quo” transition period, which is supposed to last for 21 months after the UK’s formal withdrawal from the EU in March 2019.
However, May now appears to have reached a dead end. The EU is using the Irish border issue as leverage to extract more concessions from the UK. It says that by the June summit it needs a “self-standing backstop” to prevent a hard border in Ireland, and to finalise the withdrawal treaty by October.
A deal now looks increasingly unlikely. Time is running out, and the EU does not seem to be in the mood for compromise.
The government opts to stay in the customs union, or something like it (30 per cent)
May insists that the government will respect the referendum result and stick to its commitment to remain outside of the EU customs union and Single Market.
However, the Prime Minister may not have a majority in parliament to support these “red lines”. After 14 defeats in the House of Lords, she fears that there is sufficient cross-party support to defeat her government when the Brexit Bill returns to the House of Commons in mid-June.
May was a Remainer during the referendum campaign and is probably one by instinct too. She seems ready to listen to anti-Brexit Conservative rebels who want the government to reverse its position on remaining outside the customs union and the Single Market.
Unpalatable as this scenario may be for many Tories, it may materialise because the Conservative party fears an early election that might return Labour to power.
Brexiteers replace May without holding a snap election and take control of the negotiations (10 per cent)
A decision by May to continue in some form of a customs union with the EU, and possibly even the Single Market, would probably trigger a revolt by pro-Brexit members of the government.
This would result in a leadership contest, which would probably be won by a pro-Brexit cabinet minister. However, given the government’s minority status and parliamentary opposition to Brexit, the new Prime Minister would not have a legitimate mandate to lead the negotiations without an election.
Brexiteers replace May, fight an early election, and win a majority (30 per cent)
This assumes that a leadership contest would be followed by an early election which would return a majority for a pro-Brexit Conservative party. The latter would have a popular mandate to pursue a tougher line in the Brexit negotiations. Such a government would retain the support of Northern Ireland’s Democratic Unionist Party.
The UK could play hardball, threatening that, unless the EU delivers a free trade deal, it will walk away, withhold the €40bn divorce bill, pursue deregulation, maintain an open border for trade in goods between Northern Ireland and the Republic, and play divide and rule among EU member states.
The UK walks out of the negotiations (10 per cent)
Faced with the prospect of being replaced, May presents the EU with an ultimatum along the lines described above. This would either have the desired effect of delivering a trade deal, or would result in a no-deal shock, after which the UK would trade on WTO terms. This is still possible, but a low probability.
Brexit or Brino
Brexit outcomes are finely poised between two stark alternatives. The UK stays in some form of customs union and possibly remains subject to Single Market rules, effectively not leaving the EU (“Brexit in name only”). Alternatively, Brexiteers replace May, fight new elections on a pro-Brexit ticket, and adopt a tough stance in the negotiations.
Britain must pick a side soon – Brexit hangs in the balance.
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