The ongoing Brexit saga continued on Tuesday night as the UK Parliament voted on a series of potentially consequential amendments to try and find a resolution to the Brexit impasse.
Two of these amendments passed, albeit by narrow margins. The most contentious of these was a plan backed by Conservative Brexiteers to reopen talks with the EU on the Irish backstop. Theresa May threw her weight behind this plan despite it going against a key element of the deal she agreed with the EU last year, but in doing so seems to have managed to unite the Conservative party for the first time. The amendment also gained the support of the Northern Irish DUP, whose votes are key for any deal to pass. The amendment calls for “legally binding changes” to the backstop agreement for the Irish border. The EU has already said they will not change the legal text agreed with the UK prime minister, and have repeatedly stated that the Irish backstop in particular is not up for negotiation. European Council President Donald Tusk declared after the vote that “the backstop is part of the withdrawal agreement, and the withdrawal agreement is not open for renegotiation.” French President Macron also said the agreement was “not renegotiable”. Hence, initial signs point to a renewed stalemate with the EU, and sterling has reacted negatively to this and is down around 1% versus the dollar and the euro.
The second successful amendment was an agreement by Parliament to reject a ‘no-deal’ Brexit. However, this amendment is not legally binding, rather a statement of intent. More positively, this amendment does open the way for opposition leader Jeremy Corbyn to start talks with the government – something he has so far refused until the government had ruled out a ‘no-deal’.
Other amendments which did not pass through Parliament included requesting an automatic extension to the Article 50 deadline if no deal is agreed by the end of February. Hence, the exit date remains 29 March at this stage. A vote on a potential new referendum did not even reach Parliament as it was withdrawn in advance due to lack of support.
Theresa May now has two weeks to try and negotiate a solution which is acceptable for both sides before facing Parliament again.
Robert Van Kleeck
Senior Fund Manager