Brexit Chaos Intensifies Further
Hot on the heels of a further major rejection of her withdrawal deal, the British PM, as promised, put a question to parliament which asked if it would countenance leaving the EU without a deal. Despite her “no deal is better than a bad deal” rhetoric, even Mrs May conceded that leaving without a deal would be very harmful to the economy. Whilst she insisted that this meant MPs should back her deal (which she may attempt to present for a third time next week) she made it clear that she would vote against a no deal exit (probably…). Only the Brexit extremists in parliament think a no deal exit could be desirable, so the vote ought to have been straightforward and should have been passed by a substantial majority. So far so good…
In a bid to placate the ERG faction of her party (and possibly the DUP) the bill added an obvious caveat which stated that a no deal exit on 29th March remained the default position. This provoked an amendment, led by Dame Caroline Spelman, stating that a no deal exit should be permanently ruled out. The government decided to instruct its MPs to vote against this in contradiction (in spirit at least) of its stated position. Spelman came under strong party pressure (she’s a Conservative MP) to withdraw the amendment and tried to do so, but it was “moved” to a vote by another of its signatories (Yvette Cooper) and passed with a narrow majority of 4.
Having lost on Spelman, the government changed its mind about allowing its MPs a free vote on the main motion, deciding on a 3-line whip and instructing its MPs to vote against the government’s own motion (thereby permitting the UK to leave the EU sans deal). A number of Tory MPs voted against the government, with a minister resigning to do so and some cabinet ministers abstaining with the result that the motion (as written) passed with a majority of 43. This means that parliament has stated the view that it does not want the UK to leave the EU without a deal.
The night’s shenanigans effectively means that collective responsibility in cabinet has broken down and May’s leadership credibility lies in tatters.
Today will see votes held on a main motion to instruct the government to ask the EU to agree to extend the A50 period for an (as yet) unspecified time. The motion is subject to amendments, so we’ll be talking about this tomorrow.
The only ways that the UK can guarantee a no deal exit will not happen is either to accept the May deal or for the UK to rescind its notice of intent to leave the EU under article 50 of the Treaty of Lisbon. Any other option will require the blessing of the EU as it is outside the control of parliament.
Perversely, last night’s events sent Sterling higher against other major currencies. This implies that Forex markets are going long on Sterling. The position is plainly very sensitive to political events and anything that makes a crash-out exit more likely will see a switch to going short on Sterling. The market is betting that Brexit either won’t happen or will be very soft at the moment.