Why a 'wait and see' approach on the basis of a second EU referendum cannot be used as an excuse to delay Brexit preparations.
There was a straw poll taken at the FT European Financial Summit on whether the audience thought there would be a second Brexit referendum. Approximately one third of the audience which thought there would be a rerun of the referendum. It is of concern, that such a large group of senior financial services executives might hold on to this view and potentially impact their Brexit preparations. It was made abundantly clear from the regulators present, that they expected firms to prepare for a very hard no deal Brexit irrespective.
Why is a second referendum extremely unlikely?
The logistics of running a second Brexit referendum seem extremely doubtful. There are only 14 months left until Britain is due to leave the EU. The latest a rerun of the referendum could be held is late autumn as the UK government would realistically need time to reverse the Article 50 notification or confirm an exit deal. If a vote was set for November, campaign registrations would need to be in place for September, which in turn means that the legislation would need to be signed off well before the summer recess, probably April. There is precedent to rush legislation through parliament (for example the Abdication Act of 1936) however it is unlikely that a second EU Referendum Act would be rushed through for two reasons:
1. There would be opposition from a significant number of MPs who believe that the vote has already taken place and that the mandate should be respected.
2. Even if MPs who supported Brexit agreed to such a bill, there would still be major difficulty in agreeing the details. This process, even being treated as an urgent priority would take a minimum of 3 months for the legislation to pass Commons and Lords – so publication would have to be no later than early April.
It is extremely unlikely that any conservative Prime Minister would introduce legislation to rerun an EU referendum in the current climate. Theresa May is far too weak to do so and even if she were deposed, it would take the best two months to elect a new Conservative leader.
Would a Corbyn led Labour-government rerun the referendum? Possibly, a Labour majority government could push the Bill through faster. But the likelihood of a Labour government is extremely improbable in the short term even if the DUP were to find some reason to withdraw support from the Conservatives.
If Britain was to go down the road of initiating a second referendum – a process which, would take several months – the withdrawal talks would inevitably become even more difficult for Britain as the EU waited to see what the UK electorate did second time round. How could a British government negotiate withdrawal during that period, when the rug could so easily be pulled form under their feet by the voters?
Most recent polls have suggested that a slim majority would have prefer the UK to stay in the EU. But given the scale of Remain’s lead before the last referendum that’s an uncomfortable gamble.
In conclusion, the idea of a second referendum is a fanciful distraction. Progress on a deal between the EU and Britain is still fraught with difficulty. Many corporates are still far behind in their preparations. Prudent risk management dictates that we pursue a Brexit preparation strategy based on a hard no deal scenario for now.
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