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Brexit update: What happens next?

15 September 2019

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by Marco de Matos, Research

Background:

The UK political landscape has been in turmoil since the divisive 2016 referendum on European Union (EU) membership, which saw the UK voting in favour of leaving the EU – so-called Brexit. The UK is the world’s fifth-largest economy and would be the first country to leave the EU. The vote in favour of Brexit has resulted in the resignation of two UK prime ministers (PMs), David Cameron shortly after the referendum results were announced and Theresa May earlier this year (on 24 May). It has also seen Parliament rejecting the existing Brexit deal on offer three times and the dismissal of a no-deal Brexit, which culminated in the current PM, Boris Johnson suspending Parliament on Tuesday (10 September) until 14 October – a move known as prorogation.

What happens now?

In what seems to be increasing disarray around Brexit, the question arises as to what could happen next as the UK approaches the Brexit deadline? Below, we highlight a few possible scenarios which could play out over the next few weeks:

  • A hard Brexit: A no-deal or hard Brexit remains the default position. As it stands the UK is scheduled to leave the EU on 31 October at 23:00 GMT, whether there is a deal or not. Should the PM request an extension there is no guarantee that EU countries would agree to it (although EU officials have hinted that they will likely grant an extension if asked). With Johnson repeatedly saying he would still try to take the UK out of the EU on that day, some believe he intends launching a legal challenge to the Benn bill (legislation which blocks a no-deal Brexit by requiring government to either reach a deal or gain Parliament’s approval for a no-deal Brexit by 19 October). Leaving without an agreement means the UK would immediately exit the customs union and single market (arrangements designed to make trade easier), which some commentators have warned means significant damage to the UK economy. CNN describes a hard Brexit as follows: “In an instant, the country would lose its access to the EU’s single market and customs union, which facilitate trade between the bloc’s members. All manner of legal arrangements agreed by EU bodies will no longer apply in the UK, and businesses, public bodies and citizens would have to deal with the changes that leaving the EU would bring.” The UK government’s official project to evaluate the impact of such a hard Brexit, Operation Yellowhammer, suggested that it would mean delays at Dover, widespread protests, travel disruptions and potential shortages of food, medicines and fuel under a worst-case scenario.
  • A new deal with the EU: Johnson has said he is trying to negotiate a new deal with the EU. If the parties come to an agreement backed by UK MPs BEFORE 31 October, the need for an extension falls away. However, the UK wants a deal with the major stumbling block, the so-called Irish border backstop, dropped. The backstop is a measure aimed at guaranteeing no border checks or physical infrastructure on the border between Northern Ireland (part of the UK) and the Republic of Ireland (a country which will remain in the EU). The reason for the backstop goes back to 1989’s Good Friday peace agreement which has an open border as a critical part of the armistice. The EU has insisted Northern Ireland would have to remain closely aligned to the EU to avoid a hard border and has been intransigent on the issue, stating that getting rid of the backstop is non-negotiable unless the UK comes up with a viable alternative. Nevertheless, If the UK and the EU do not agree on a deal by 19 October, and MPs don’t vote in favour of leaving with no deal, then the PM will be legally obliged to request a delay.
  • Circumventing the law and blocking a no-deal Brexit: If there is no new deal, and the PM refuses to ask for an extension from the EU then there is likely to be a legal battle. Cabinet ministers have said the government will obey the law, but Johnson has insisted he will not ask for an extension. There have been media reports speculating that the PM would look for a loophole in the law or use some other device to avoid having to request an extension. In early September, the PM expelled 21 Conservative Party members from parliament after they defied him and voted for the no-deal extension measure.
  • Early UK election: Johnson has indicated that he still wants to have an election soon, after his motion for an election on 15 October was defeated because Labour abstained for a second time, leaving him short of the two-thirds majority needed. However, as things stand any election will have to take place after 31 October (the UK’s leave date) since Parliament is suspended until 14 October and from that point there must be at least 25 working days before a general election takes place i.e. around mid-November. To date government has twice failed to get two-thirds of MPs to support an early election under the Fixed Term Parliaments Act. Nevertheless, the opposition could support an election in a third vote. The alternative is a new law specifying the date of an early general election as this would require only a simple and not a two-thirds majority. The opposition could call a vote of no confidence in government at any point and Labour leader Jeremy Corbyn has said he would table such a motion. Johnson could also call a no-confidence vote in his own government. If more MPs vote for the no-confidence motion than against it, there would be a 14-day window to see if the current government – or an alternative one with a new PM – could win a vote of confidence. If no-one does, a general election would follow.
  • A second Brexit referendum: While this is unlikely to happen, it is not impossible – opposition parties could unite to try to bring about a second referendum.
  • Cancel Brexit altogether: The final legal option available is to cancel Brexit altogether by revoking Article 50 (the UK invoked Article 50 of the Treaty on the EU on 29 March 2017 and thus began its exit from the bloc). However, by all accounts this is not something the current government is contemplating – so this outcome is only likely after an election and a change of government

Johnson suffered a further setback on Wednesday (11 September), when a Scottish court said Johnson’s move to shut down Parliament was unlawful. However, Parliament will remain suspended pending an appeal to the Supreme Court.

The impact of a hard Brexit on SA:

On Wednesday (11 September), South Africa’s (SA’s) Trade and Industry Minister Ebrahim Patel announced that a partnership agreement between the Southern African Customs Union (SACUM; which includes SA, Lesotho, Eswatini [Swaziland], Namibia, Botswana and Mozambique) and the UK has been concluded. Patel said that the two countries have an agreement in place, “subject to approval by cabinet and ratification by Parliament, that allows a seamless arrangement between SA and the UK in the event of a no-deal Brexit” adding that this “… is good news for jobs and … investment,”. According to the minister following a lengthy negotiation, the SACUM-UK Economic Partnership Agreement (EPA) was concluded and it will come into effect should Britain leave the EU by 31 October. He reiterated that regardless “… of the outcomes of these processes, our trading relationship with the UK can continue without disruption.” Moneyweb writes that trade between the UK and SACUM stood at GBP9.7bn (c. $12bn) in 2018. The UK is SA’s fourth-biggest trading partner.

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