May's Brexit deal could fail unless EU leaders lend support

London

THE initial reaction of both the United Kingdom and European markets was relief as Theresa May emerged victorious in the Tory Party no-confidence vote. There is now certainty that the Prime Minister will continue with the Brexit negotiations for the time being and she has been doing her best to sway EU leaders.

Unfortunately for business, the markets and foreign investors, Mrs May is now in a weaker position, even though 63 per cent or 200 MPs voted for her to stay on as Tory leader and Prime Minister. Her problem is that 117 Tory rebel MPs voted no-confidence in her leadership. These MPs and the Northern Ireland Democratic Unionist Party (DUP) are the stumbling block in pushing her Brexit deal through Parliament.

Mrs May's victory in the no-confidence vote means that there cannot be another attempted coup against her for another year. In the unlikely event that Parliament votes for her deal early in the New Year, Mrs May can negotiate a free trade accord with the EU. But if the deal isn't accepted, MPs will seek other solutions including a "Norway option", second referendum or a "no deal" which MPs, businesses, Unions, Northern Ireland and Scotland oppose. Since Mrs May stated that she would stand down as leader before the general election date in 2022, Tories could thus place pressure on her to resign, soon after the March 29, 2019, Brexit date.

So far, however, EU leaders have indicated that they will not renegotiate the Withdrawal Agreement and will just offer non-binding promises and clarifications in an attempt to get Parliament to accept the deal. Mrs May wants binding changes to the legal text. Her proposed changes relate to the so called "backstop" insurance part of the withdrawal accord. The backstop, which would come into effect if a trade deal isn't negotiated by early 2022 at the latest, is a requirement that the UK, including Northern Ireland, remains in the EU's customs union.

Such an arrangement would prevent the re-emergence of a physical border between Northern Ireland, which is part of the UK and Ireland, which is in the EU.

If there are border customs checks again, there is a real danger of renewed conflict between the Northern Ireland Protestants and Catholics. The fighting ended under the 1998 Good Friday Agreement and understandably the Irish Government and Northern Ireland residents do not want a renewal of violence.

MPs are against Mrs May's backstop deal as they fear that the EU could keep the UK in the EU's custom's union in perpetuity. They want a time limit, allowing the UK to withdraw unilaterally.

None of the alternative deals put forward by either Brexit MPs or those who prefer the "Norway option" solve the Irish border problem. There has thus been a growing movement, including an editorial in Conservative- supporting Times, for another referendum.

The problem is: what question? "Leave or Remain in the EU" as former premier Tony Blair proposes, or " Mrs May's deal, no deal or remain in the EU". Both Mrs May and Jeremy Corbyn, the Labour leader of the opposition are reluctant to call another referendum. Several working class constituencies voted leave in both Conservative and Labour constituencies. People there would be antagonised as they would believe that their democratic vote in the first referendum was ignored.

In the meantime, the political chaos is having a negative impact on investment and the UK economy. The latest example is a slide in both residential and commercial property turnover and values. The Royal Institution of Chartered Surveyors said that its monthly indicators for volume of deals and prices fell to multi-year lows in November. Many surveyors attributed this to Brexit uncertainty.

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