How close is the UK to a “cliff-edge” Brexit? Maybe closer than you think…

Negotiation is a game.  Over a long working life I’ve played the negotiation game with some of the best for as long as the UK has been in the EU – with politicians, Trades Unions, suppliers, customers and regulators.

It’s clear that for the parties to negotiating the terms of the UK leaving the EU are playing it as a “game.”

But it’s a dangerous game, and it’s being played out on the edge of a cliff.  And to stretch the analogy - the players are locked in discussions and circling each other long after the date set to reach a draft Agreement, retire from cliff-edge, and begin an orderly transition to  Brexit.

The risks of a no-deal and uncontrolled exit from Europe are now compounding.  There is no draft of an Agreement to fall back on in an emergency; the cracks in the political underpinnings are widening; the time needed to get back to safe ground is close (closer than has been acknowledged); or any unexpected shock coming from outside the control of the parties – could result in the UK crashing out of the EU.

If things go wrong between Brussels and at Westminster, the consequences are profound for the next two-to-three generations who will have to pick up the results and begin to reconstruct the Nation from scratch.  Brexit is a serious game – the highest stakes contest of my lifetime – with the winner getting to shape British history as the prize.

The uncertainty - together with a growing awareness that government officials, business, commerce and citizens need time to absorb the implications of moving to a post-Brexit world, plan, prepare and implement a transition – is causing a hiatus in investment. There are simply too many potential scenarios for enterprises – small, medium and large – to include in their contingency planning. Something that we have been advising for over two years.  The lead-times to make an orderly change ran out – witness the NHS stockpiling medicines coming from or through Europe in order to deal with any interruptions in the supply-chain.

The scenarios now appear to be: a second referendum – and no Brexit; a deal with a transition period - effectively continuing the status quo to 31 December 2020; an extension of this scenario for an indeterminate time after that; or a cliff-edge sudden break with no-deal at 23:00 GMT on Friday 29 March 2019, just 155 days from now?  Or perhaps something else entirely – a general election between now and Brexit?

We need to prepare and we can’t know with absolute certainty – and can only play the odds and plan accordingly.

Despite the People’s Vote movement and march, the odds are still on Brexit going ahead without another referendum according to one political insider.  The people voted for it, the Government wants it, the PM says there’s no choice.  The leader of the Opposition isn’t revealing what he wants.  And even if everyone changed their minds – unlikely - there’s not enough time for a vote before Brexit point of no return is reached.

The default scenario points to exit.  Even though polls overwhelmingly show most people thinking that the talks are going badly – with a “narrow majority” at present wanting to Remain.

The Withdrawal Act includes a clause granting Parliament the right for a “meaningful vote” on the exit terms.  This has to be held by 21 January 2019.  If the Government has not negotiated a deal by that date, MPs will vote on the no-deal scenario – the dire consequences of which we have been spelling out in detail in previous Brexit Partners insights on the basis of the 100+ no-deal Technical Notices - which may or may not find them amendable to opting for a second referendum.

21 January 2119 – coincidentally the date of a total eclipse of the moon across Europe – is Theresa May’s last day to put a deal before – and secure the approval of – Parliament.  Planners everywhere – put this date in your diary!

At the time of writing, the World that appeared open to the UK in a post-Brexit era – a global village full of free-trade – or worse case 168 Nations signed up and cooperating under the WTO rules – has changed beyond imagination.  The present USA administration is tearing up global, regional and bi-lateral Agreements and Treaties.  Thousands of millions of transactions have had tariffs imposed where none have existed for decades.  Countries that were old trading partners of the UK are facing economic collapse.  Further shocks are predicted, and global stock markets are reflecting this.  Yesterday saw up to 3% wiped of the value of stock exchanges.

The Prime Minister in Parliament at PM Questions this week accused Jeremy Corbyn of wanting a general election more than a referendum.  Interesting that it was not a choice between a general election and a vote on “deal or “no-deal”. 

Our political insider commented that:

“What Labour does is now crucial in this nation-changing game of dare being played out on the cliff-edge.”

John ShuttleworthComment