Uphill struggle as May will face getting Parliament to back her on proposed deal

15 Nov 2018

Uphill struggle as May will face getting Parliament to back her on proposed deal

The opposition to the proposal in Cabinet yesterday lays bare the uphill struggle May will face getting Parliament to back her in a "meaningful vote" on the proposed deal. This is particularly so given that May's DUP confidence and supply partners are displeased and may well therefore not back the vote, unless further concessions can be gained in the coming days.

The EU has confirmed sufficient progress has been made for a Summit to go ahead; this is set for 25 November, though there is clearly more work to be done. On the domestic political front, May is giving a statement to Parliament this morning; expected at 10.30am.

This will further clarify the mood of Parliament on this will no doubt serve to highlight the uphill struggle May will face in passing the proposal as it stands. This will also serve to highlight the thin detail on future trading arrangements proposed for the permanent end state. Sources are citing the 18 December as a date for a Parliamentary vote, perhaps with the idea of PM May bouncing MPs into accepting her proposal, faced with a ‘no deal’ alternative and very little time for a re-work. As noted previously, if May fails to get Parliament behind her, one route forward could be a cross party motion, instructing the government to return to negotiations with Brussels. This could lead towards the UK seeking a closer relationship with the EU than Mrs May’s proposals.

Irish Economy: Residential prices on track for 8% growth this year

The latest Residential Property Price Index (RPPI) release from the CSO shows that residential prices in Ireland posted another solid rise in September, increasing by 0.7% m/m. The annual rate of growth moderated for the fifth successive month however with prices 8.2% higher on a y/y basis in September, compared with the recent high point of 13.3% in April this year. Looking at regional variations, prices in Dublin and outside of Dublin have increased by the same amount over the past three months (1.9%), but y/y growth is greater outside of the capital (10.8% vs. 5.8%). 

This is likely due to the Central Bank’s mortgage limits having a greater impact in Dublin (where prices are higher) and an element of catch-up – prices in Dublin began increasing 15 months earlier and are further above their trough (96% vs 78%). Overall, national prices are now 18% below the 2007 peak. Residential prices rose by 6.5% in the first nine months of the year and given the still-positive momentum (the string of m/m increases has now stretched to 21 months) our expectation for full-year growth of 8% looks like it won’t be far from the mark. 

White Smoke as Cabinet back Brexit Proposal 

After a marathon Cabinet session on the draft technical Brexit agreement with Brussels, Prime Minister May emerged on the steps of Downing Street to say that collectively the Cabinet had agreed to back the proposal. However this had clearly been a very difficult meeting with a significant number of the Cabinet objecting to the proposal. We have just seen the resignation of junior Northern Ireland minister Shailesh Vara. We now wait to hear if any Cabinet level minister resignations follow, with Brexiteer Ester McVey, Secretary of State for Work and Pensions, said to have been the most disgruntled. 

The 585 page draft withdrawal agreement was published after the Cabinet, laying bare why the Brexiteer leaning ministers are disgruntled with the proposal. Firstly, after the UK’s exit from the EU on 29 March, the proposal places the UK into a transition in which it effectively operates as if it is an EU member state. This transition provisionally runs until end-2020, though with the possibility that this could be extended for an unspecified period (as a way to avoid the Northern Ireland backstop coming into force); any extension would be by joint agreement. 


The backstop puts the whole of the UK into a customs territory, but with Northern Ireland retaining the rules of the single market too to avoid the need for a hard border on the island of Ireland. The DUP is particularly displeased with the proposal, with Northern Ireland effectively facing a regulatory/rules border down the Irish sea.  This idea of a UK wide customs union backstop is also particularly unwelcome amongst the Brexiteers, particularly given that the UK has not secured an agreement that it can unilaterally chose to exit to a new permanent end state.  On future arrangements, there is currently only a seven page proposal ready at this stage; the full political declaration is still to be put together. The real, legal negotiations, on this will not start until after the UK exits the EU next March whilst work on the political declaration with the European Parliament will begin today, according the EU’s chief negotiator Michel Barnier. 

Thought of the Day

After months of painful negotiations, the loss of numerous ministers and junior ministers and at least one narrowly avoided confidence vote Theresa May has finally delivered the wording of the Withdrawal agreement to her Cabinet. After an extended 5 hour discussion, May seems to have come through the meeting in tact with the backing of Cabinet. The single resignation so far (if it stays that way) is surely beyond her expectations heading into the meeting. 

With the backing of Cabinet the agreement next heads the EU Summit which Donald Tusk confirmed will take place on 25th November. Assuming the EU agree to the withdrawal agreement, the final agreement will return to the UK parliament for the “meaningful vote” which Theresa May was forced to concede back in December 2017, before returning to the EU parliament before final agreement. 

The only other point which could derail the agreement at this stage is a vote of no confidence in Theresa May. Non-cabinet Brexiteers have been very vocal in airing their displeasure at the agreement since yesterday morning. In order for a vote of no confidence to take place the Tory parties 1922 committee needs to receive 48 letters from party members (15% of the 315 sitting Tory party members). Only the chairman of the committee knows how many letters have been received thus far, but a wave of letters from Brexiteers would likely be enough to trigger a vote. 

Once chairman of the 1922 announces that the required number of letters has been received, a vote is held as soon as possible. In 2003, when Iain Duncan Smith was ousted as leader in opposition, the vote was carried out the day after the announcement. The previous leadership contest took 20 days from when David Cameron announced his resignation until Theresa May was announced as leader, however with leavers and remainers likely to contest any election fiercely, a leadership vote is likely to be strongly contested and may drag on for longer.