Withdrawal Agreement roundly rejected by UK Parliament

Last night the Brexit Withdrawal Agreement which had been negotiated by both the UK government and the EU was roundly rejected in the UK Parliament by 230 votes – the largest defeat for a governing party in UK parliamentary history.

Immediately following the vote, the Leader of the opposition Labour Party Jeremy Corbyn called for a vote of no-confidence in the government, which will be held this evening. If the government loses, a General Election will be called.

Does this make a no-deal more likely?

Without question – the sheer scale of the defeat means that it will surely be difficult to resurrect this version of the Withdrawal Agreement, and with the EU intent on not renegotiating, the prospect of the UK leaving the EU without a deal has risen substantially.

What happens next?

The vote of no-confidence will take place this evening – there are indications that many of the Conservative MPs who voted against the deal, as well as the Democratic Unionists which support the Conservatives in Westminster, will vote with the government. If the government wins the vote this evening, it will have to come back to Parliament with a “Plan B” regarding Brexit by early next week. If it loses (the less likely option), the government will fall and a General Election could be called.

What are the scenarios now?

  • Extend the Article 50 negotiating period – this requires a formal request from the UK government to the EU, and for every EU Member State to agree. Theresa May has up to now said that this is not something she is considering, and it would also require amending existing legislation which says the UK will leave on 29 March. German Economy Minister and the EPP appear to support such an extension, but only for a matter of weeks, not months – likelihood 7/10

  • Run down the clock to a “no-deal” - it is important to remember that the UK will leave the EU on 29 March by automatic operation of law, so it is the default option. However, there is no majority for a no-deal Brexit in Westminster, and the impact on business and citizens in both the UK and the EU is considerable. It is therefore a highly risky option – likelihood 3/10

  • Revoke Article 50 – this can be done unilaterally by the UK government and would halt the whole Brexit process. Some MPs would support this, but many would be anxious about angering their electorate and fear that it would be seen as being anti-democratic, since it would reject the referendum outcome. Politically, this is also very difficult to achieve – likelihood 3/10

  • A second referendum – calls for a second referendum have been increasing of late, but there is insufficient time to arrange this before 29 March, so an extension would have to be requested (see above). The result of such a referendum is unclear – even if Remain wins, it would surely be a narrow victory, and would solve nothing in the longer term - Likelihood 6/10

  • Insist on renegotiating the deal – this is in some ways the logical option, but the EU already feels it has given up a lot and is still reluctant to renegotiate. Theresa May is still insisting on her so-called “red lines”  leaving both the Customs Union and the Single Market. However, last night’s vote may encourage some Member States to ask for more flexibility from their side to avoid a no-deal - Likelihood 5/10

The reaction from Brussels

This morning the EU chief Negotiator Michel Barnier said that the risk of a no-deal has risen sharply following the vote, adding that the EU must accelerate its emergency planning. He emphasised however that the Withdrawal Agreement as negotiated “remains today the best possible compromise.” In an interview with the BBC, German Economy Minister Peter Altmaier seemed to suggest that he would agree to an extension of Article 50, as did some MEPs in the EPP group during this morning’s debate in the Parliament.

Emmanuel Macron said Tuesday that a no-deal Brexit is “scary for everybody” – on renegotiating the deal he said “we’ll look into it, maybe we’ll make improvements on one or two things, but I don’t really think so because we’ve reached the maximum of what we could do with the deal and we won’t, just to solve Britain’s domestic political issues, stop defending European interests.

With the situation still in flux, the Grayling Brexit team is monitoring the situation closely and will keep you updated. If you have any questions in the meantime, please do let us know.

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