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Altair Alert: Brexit Update

BREXIT UPDATE
AUTHOR: Marketing Communications
DATE: January 17th, 2019 CATEGORY: alert news

UK Parliament finally voted on the Withdrawal Agreement that was initially negotiated by UK Prime Minister, Theresa May, in November 2018. Parliament rejected the bill by 432 votes to 202. Less than a third of Parliament supported the Prime Minister – the largest UK Government defeat in history on a major piece of legislation. This leaves the future path of the UK open to a number of options.

PRIME MINISTER: TO BE OR NOT TO BE?

The Leader of the Opposition (Labour) Party, Jeremy Corbyn, tabled a motion of “No Confidence” in the UK Government immediately following the vote on the Withdrawal Agreement, and this was backed by the leaders of all other major political parties in the UK.

This vote of No Confidence in the UK Government took take place yesterday, January 16th, and Theresa May, having two unlikely allies – The European Research Group (ERG) and Democratic Union Party (DUP) – survived the vote. May has already announced her intention to continue as Prime Minister, and to see the job through.

If this does indeed happen, the Prime Minister will again set about identifying what will be required to secure the backing of Parliament. Given that these negotiations have been ongoing for nearly two years, with pressure to find agreement heating up in recent weeks, this task will not be any easier than it has in recent weeks, and all the while the clock continues to tick up to Brexit date of 11:00 AM on 29th March 2019. Just ten weeks away. 

DEAL OR NO DEAL?

Theresa May herself issued the Article 50 notice, which is the clause terminating the agreement with the European Union back on 29th March 2017. This is legally binding and can only be extended by agreement from all other 27 members of the EU. Interestingly, the European Court of Justice ruled on 10th December 2018 that, should the UK change its mind about leaving the EU, then the UK would have the freedom to rescind Article 50 without permission from any other EU country. In recent days, May has been quoted as saying it would be better to have no Brexit than ‘No Deal.’  

Certainly, the EU will surely be more alarmed than ever about the consequences of a no deal and pressure will be on to finalise terms around the Irish backstop which has proved so unpopular. The Prime Minister may now go back to Brussels to ask for legal guarantees around this contentious issue that avoids a hard-Irish border – which includes a temporary UK-EU customs union that Eurosceptic Conservative MPs will strongly oppose – will not become a permanent arrangement. To date, the powers at the EU have always rejected this idea. 

GIVE MY REGARDS TO NORWAY

The much-discussed Norway option and single market representation may also be discussed, but if these are to succeed, they will also require a Withdrawal Agreement closely aligned to the one already negotiated by Theresa May. 

The almost certain likelihood now is that the Brexit date of 29th March will have to be delayed to allow for more time for negotiations. This is within the power of the collective EU, but there will be an expectation of a detailed Plan B from the UK before the EU are likely to agree to any extension. The only alternative to this will be for the UK to proceed with a no deal/hard Brexit, and the Prime Minister has already made clear this is far from the best option for the UK.

 

Altair Global (‘Altair’) has provided this information as a service and convenience for your information only. It is not intended to replace your own legal or financial guidance and/or assistance and you are encouraged to seek the advice of your own tax and legal advisor. Further, the information contained herein is to our knowledge accurate to the extent of the data available to Altair as of the date identified. Altair does not assume responsibility for the accuracy of the contents hereof and is under no obligation to update the material contained herein