Extension rebellion raises Brexit uncertainty

20 Oct 2019

Phil Shaw

Investec Chief Economist

On Saturday the House of Commons effectively voted to delay the approval of Prime Minister Boris Johnson’s recent Brexit deal with the EU27.

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This was in the form of the backing of an amendment by MP Oliver Letwin to the government’s motion, the intended fourth Meaningful Vote (MV4). Ostensibly this was because the legislation drafted in September to prevent a no-deal Brexit at the end of October (the so-called Benn Act) contained a loophole.
 
This was that the Act enabled the government to override an extension granted by the EU27, providing that Parliament had approved the deal. However, the Act had overlooked the possibility that the House of Commons could, in theory, subsequently reject the legislation necessary to implement the deal into law.

Where do we go now?

Mr Johnson has triggered the process demanded by the Benn Act and sent the letter requesting a three-month extension from Brussels. However, he refused to sign it and sent two others insisting that this was parliament’s decision rather than his, but also explaining that the ratification would continue in Westminster next week.
 
We do not yet know EU leaders’ responses, but we doubt that the  EU27 will reject an extension. There are two reasons for this. First, it does not want to be held responsible for any economic chaos ensuing from the UK leaving the EU without a deal. Second, it is quite possible that in a ‘straight’ meaningful vote, the government would find enough numbers to approve Mr Johnson’s deal. One possible approach would be to delay a reply, primarily to monitor progress in Parliament. Indeed there has been talk of holding a meaningful vote tomorrow (Monday) if allowed by the Speaker.
 
Meanwhile, it is believed that the legislation itself (the Withdrawal Agreement Bill) could be fast-tracked through both houses of parliament. However as regular readers may be aware, we have argued for a while that the timetable would be very tight for the UK to depart from the EU on 31 October.