Watching the spectacle at the House of Commons these last few days and weeks, one is left with a feeling alternating between crude fascination and deepest despair.
Fascination because of the numerous twists and turns of a Hollywood plot. Prime Minister May looses by a massive 230 votes the support of the House for her Brexit deal, but had previously in December survived a Tory vote about her leadership as well as more recently a House vote of confidence in her government.
Despair, because after all these historic developments, sometimes unprecedented in their magnitude, we still do not know what will happen on 29 March 2019. Will the UK leave the European Union with an orderly exit, will it crash out under a no-deal scenario or will it still be an EU Member State? All three options are more then ever on the table.
The orderly exit scenario is the most predictable one because scripted in the yet to be ratified Withdrawal Agreement. Unfortunately in these times “most predictable” doesn’t necessarily rime with “most probable” anymore.
The disorderly Brexit would materialise if things go on like they have been for a while and no majority forming for an approval of the deal nor for alternative solutions. This is what businesses, including the financial sector, fear most and have been preparing for.
A situation where the UK would still be part of the European Union, possibly on borrowed time, had been judged only two months ago as very unrealistic. Three things have changed in the meantime. The first is that the Court of Justice of the European Union has judged that the United Kingdom can unilaterally revoke its article 50 notification. Secondly, with pressure building up so high and a disorderly exit in sight, the government might be forced to request from its partners an extension of the article 50 period, a possibility flatly rejected by the UK Prime Minister when she explained her plan B. Thirdly, talks about a second referendum have started building up steam although Theresa May equally rejected such a possibility rather clearly and the preparations to such a referendum would go well beyond the date of the European elections and the constitution of the European Parliament in early July. Another headache that makes this option not the most likely but now a not completely improbable outcome.
On Monday 21 January, Theresa May has explained her plan B which is nothing less than… plan A. The UK Prime Minister ploughs on unwaveringly apparently waiting for the Parliament to blink and in the last minute to support her deal. A high stake poker if ever there was one. And the clock is ticking down to 29 March.
A way out has been shown by a widely remarked amendment by MP Yvette Cooper. The said amendment to a motion tabled by the government says that if ever there was no support for the Brexit deal on the table by 26 February, the Parliament would get the right to request an extension of the article 50 period. This amounts to an emergency brake that would give all participants the possibility to buy a bit of time, but ultimately not a solution per se.
With two months to go it is still not clear what is going to happen on 29 March. Preparations by the European Commission, the European Supervisory Authorities and national governments in various Member States are on their way for a no-deal Brexit. Just in case. Financial institutions have done so as well. For the moment it is very much “wait and see” on this side of the Channel.
By Antoine Kremer, ABBL & ALFI Head of European Affairs.