Mrs May’s ‘Chequers’ deal was voted down for a second time last week, turning deadlock into confusion that seems to have increased as the week went by. Now, with just a week before our original scheduled departure, we have not one but two new deadlines – 22 May if MPs agree a deal, and 12 April if they don’t.
We look at what could happen now – and what it could mean for your own finances.
A hard Brexit may be off the table – for now
Among the many votes to go through parliament last week, one of the few decisive results was that a hard Brexit was ruled out.
With a hard Brexit the country would adopt World Trade Organisation (WTO) terms. That would mean tariffs on imports and exports with the EU. According to the Centre for European Reform, Industrial products would face 2-3% tariffs. Cars – crucial for the German economy – would face substantially higher 10% duty. There would be a basic tariff of 14% on most agricultural products, with up to 32% on a bottle of French wine.
With no deal, businesses lose passporting rights, which let them work across the EU. The financial services industry, the heart of the UK economy would be particularly vulnerable.
A hard Brexit could still happen if no deal can be agreed and Brussels runs out of patience.
Could Mrs May’s deal be accepted after all?
The government’s deal was defeated last week by a majority of 149, and last Monday the speaker refused to allow another vote without substantial changes.
Ministers are negotiating with the DUP and hope to get them and eurosceptic MPs from the European Research Group (ERG) on side while some kind of new deal is thrashed out. If a new deal can be agreed, the government will need a short extension from Europe to allow time for legislation to be passed.
Mrs May requested this extension from the EU on Wednesday. It could reduce disruption to both the UK and EU economies. But MPs don’t seem to be keen on compromise – and neither does the EU. Brussels has said it will only allow an extension – to 22 May if Parliament agrees the deal in the meantime.
Thursday’s agreement on delaying Brexit made clear if parliament cannot back a deal, EU leaders will only provide an extension until 12 April.
A No-confidence vote
Jeremy Corbyn has made broad hints that Labour might table another no-confidence vote in the government. Mrs May won the last one, in January, by 325 votes to 306 but some hard Brexiteers could vote with Labour to bring down the government.
After a no-confidence vote, there would be a fortnight in which MPs could form an alternative government. If no majority emerged, a general election would be called. An extension would still be required to allow time to find a way forward.
It seems likely that this would have a negative effect on the economy – although with Brexit it is always unwise to make predictions.
Parliament demands a referendum
A long delay might encourage the idea of cancelling Brexit altogether. This would require another referendum, which might be popular with Remainers.
Both the government and the opposition would probably propose deals to put to the public. Mrs May, who has claimed another poll could threaten social cohesion, would probably resign, or trigger a general election.
A referendum would have an unpredictable outcome – and as the past few years have shown, equally unpredictable effects on the economy.
What will happen?
Apart from the possibility that Brexit is cancelled because no one can agree how to do it, we will probably be leaving the EU, sooner or later. Quite what this will mean for the UK economy – and your own cash – will depend on the exact form this takes.
Whatever Brexit holds, careful investment and diversification can help provide a sound basis for your own future. It might be time to look at your plans with an expert to ensure they are the best solution for you.
Naturally, at Continuum, we would be very happy to help.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
telegraph.co.uk – What will Brexit mean for British trade? – 24th February 2017
cer.eu – EU Facts: What Would Leaving Mean For Trade? – 29th February 2016