Five urgent questions on Brexit – and our Oracle’s response.

In 135 days, the UK and the EU are due to turn a historical page: the first time ever a country leaves the Union. An agreement about an orderly withdrawal is ready, at least between the EU’s Brexit Task Force and the British Prime Minister. Whereas the EU appears to have managed to preserve its key objectives, many in the UK dismissed the outcome even before Mrs May had revealed its precise content. Theresa May, just like opposition leader Jeremy Corbyn, has ruled out the option of not-Brexiting; the choice she effectively wants to put to Parliament is either May’s deal or mayhem. The Prime Minister wants to avoid a vote for a “third way” – the Commons sending her back to Brussels to secure a better deal (highly unlikely – many Brits haven’t realized that only they believe the EU needs them more than the UK needs the EU), or opting for another referendum (also highly unlikely to pave the way to a more broadly accepted outcome).

The outcome could remain uncertain until the actual vote in the Commons, possibly in early December. This raises a number of questions which our GPLUS Oracle attempts to answer.

  1. Will Theresa May get a majority for her deal?

The Prime Minister’s hope probably is that when the day of reckoning comes, most politicians will prefer any deal to no deal. The closer we get to 30 March next year, the greater the threat of crashing the car with the airbags and safety belts de-activated will have become. It may be a perverse strategy – playing on fear and banking on people going for the lesser of two evils – but given the time constraints and lack of majority support for any alternative solution, this is where we appear to be heading.

  1. And what if the Commons rejects it?

If May loses the vote, she will possibly have no choice but to resign. Whatever events that triggers – a Tory leadership vote, a fresh election, potentially even another referendum – none of them will solve the Brexit conundrum as if by magic. And all that while the clock will keep ticking. Whoever runs the country will realize that there simply is no “good Brexit”. A rejection therefore would, most likely, lead to a “hard” Brexit, or be reversed in favour of the deal now reached, possibly with some cosmetic changes after an extension of the negotiation period.

  1. Could the UK ask for more time?

It certainly could – and if the current political turmoil persists and no majority for any particular outcome emerges in time, the UK might have no choice but to ask for an extension of the art 50 period. I presume most UK members of Parliament would prefer that to crashing out on 30 March with no deal.

The EU might agree – but there’s a problem: EP elections take place starting 23 May; if the UK were still a member then it would have to participate – not impossible but currently inconceivable.So we are talking of a potential extension by a few weeks, not months. The EU-27 want to get on with it; too much time and effort have been dedicated to Brexit already, and why should an extension of six months produce a better result than one of six weeks? From a Brussels perspective, the pressure is harder on the UK, so why give the British side breathing space (without guarantee that it would achieve anything)…? Needless to say that a request for an extension would further weaken the UK negotiating position.

  1. It seems a majority of British citizens – if not political party leaders – would now prefer remaining in the EU. Wouldn’t the 27 other Member States also prefer to stop the process?

Even if there was another referendum on Brexit, voters were to change their mind and opt, on second thoughts, for remaining (two big “Ifs” – but they seem the only way to try and stop the Brexit train), the notice has been served and the other Member States would effectively be asked to unanimously agree to scrap the process and pretend the last 18 months were just a bad dream.

It is doubtful they would do so. As much as most – and perhaps all of them – would rather have the UK remain inside the EU, they would also at this stage prefer Britain to leave and then re-apply. Besides the fact that everyone is fed up with the UK’s indecision as well as with its “have your cake-and-eat-it” approach, they have two good reasons:

First, they would want to be sure that the UK truly wants to stay, based on broad support both by its people and the political class. There’s no appetite for having a member that is constantly on the verge of leaving, or requesting special terms. Maybe, so the thinking goes, the British must first experience the pain of being “out” so that their wish to be “in” again is credible. This appears to be what other countries’ leaders mean when they mention a second referendum: Not one about cancelling Brexit, but a vote on re-applying.

Second, if Britain has to re-apply, its terms of membership would be re-negotiated – an opportunity the others won’t let pass. Bye-bye to the rebate, and expect arduous talks on any exemptions the UK would look for. There would certainly be no re-winding of the clock – Britain would come back, but on less beneficial terms and with a much reduced standing and influence.

In the meantime, there would be little on the downside for the other Member States and their economic operators: the UK would be out, but it would either continue to be bound by EU laws and regulations as well as remain within the customs union and also pay budgetary contributions or, in the absence of a withdrawal agreement, would most likely take unilateral steps – followed by emergency arrangements agreed with Brussels – to minimize the impact of its withdrawal. It would make no sense to act otherwise if the plan is to get back in. In other words: there would be no regulatory or trade disruption, the only immediate change being that the UK becomes a rule-taker instead of rule-maker. That would bother UK politicians but few people on the continent.

  1. Suppose all possible accidents happen and the UK crashes out of the EU, with no deal. What then?

Both the UK and the EU would have strong incentives to cushion the impact of such a Brexit and to reach at least some quick, damage-limiting arrangements (to keep planes in the air, supplies coming through, capital flowing…). The UK’s bargaining power, however, would be greatly diminished in this scenario. Chances are that in order to minimize the negative impact, the EU would take the most urgent steps to safeguard its economic interests – and expect the UK to reciprocate. London would feel compelled to unilaterally declare its intention to abide by most, if not all, EU laws and regulations as well as try to stay within the customs union. The EU would tie its acceptance and cooperation to continued financial contributions. Still there would be massive uncertainty and potential for disruption – just think of the myriad of EU trade deals with third countries