The MP strikes back

In an unprecedented move, yesterday evening saw a small cross-party group of members of parliament initiate legislation to enable them to wrest control of the Brexit process from Prime Minister Theresa May in a move that will see a series of indicative votes put before the UK parliament tomorrow evening (Wednesday 27 March).  

These will constitute a non-legally binding process whereby MPs’ preferences for various Brexit outcomes are whittled down one by one until a preferred outcome is identified. The options are expected to number about half a dozen, and are likely to include the UK prime minister’s existing deal, a so-called ‘no-deal’ or ‘hard’ Brexit, and various shades of compromise deals, all of which are likely to represent a closer relationship with the European Union (EU) than that envisaged by the UK government’s current proposals.

Running order critical

Critical to the outcome will be the order in which the Speaker of the House of Commons John Bercow decides to present each voting option, with those towards the end of the running order most advantaged owing to the options being eliminated on a knockout basis. The process is being seen by some traditionalists  – and, via a strongly-worded statement, by the UK government itself – as an undesirable constitutional development that upends centuries of parliamentary precedent by allowing the wider House of Commons to effectively seize control of business from the government.

The logical initial conclusion from this development, given that approximately 70% of MPs wish to remain within the EU, is that the process could lead to a closer relationship with the EU than that contained within Theresa May’s  existing deal. However, as so often within this long-running saga, it is not as simple as that. The emergence of recent comments made by Irish Taoiseach Leo Varadkar appeared to suggest that there will be no need for a border between the Irish Republic and Northern Ireland owing to technological advances, which has led some to question the prominence of the so-called Irish backstop as such a significant sticking point throughout the Brexit negotiations.

Third time lucky for May?

The Democratic Unionist Party (DUP) has not as yet changed its stance in the light of these comments, but if it does it may be regarded as a reason for the European Research Group (ERG) within the Conservative Party and other Brexit-supporting factions to also change their voting intentions to support the UK prime minister’s twice-defeated deal. One should not forget that the DUP currently holds the balance of power, and may not wish to see its political influence potentially eviscerated by another UK general election. Perversely therefore, Mrs May’s deal could even be a beneficiary of the tumultuous events in the House of Commons on Monday evening.

Markets have so far welcomed the latest steps in the Brexit process with cautious optimism, with a mildly stronger UK currency the most notable consequence at this stage. However, concerns about the possibility that a meaningful change in tack on UK Brexit policy could lead to a general election (and potentially more instability or a change in government) have so far kept a lid on any positive reaction.

The practical implications of last night’s significant parliamentary developments should be easier to ascertain once the so called ‘will of parliament’ has been expressed tomorrow evening. The possibility of no outstandingly well-supported option, however, remains, and would potentially obfuscate things still further.

Authors

Paul Markham

Head of Global Opportunities