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Mrs May battles for Brexit withdrawal deal in decisive week

She may resign if she loses the vote next week. As the Dec 11 vote approaches, many MPs are still undecided.

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Anti-Brexit demonstrators protesting outside the Houses of Parliament in London this week. The electorate is divided now as well, and polls have indicated that more are now leaning towards staying within the EU.

THE House of Commons began on Tuesday a five-day debate on the Brexit withdrawal deal, setting off one of the most decisive few weeks in recent UK political history.

With the government expected to lose the key vote on Dec 11, a key question for financial markets and Theresa May's political future is what the scale of the defeat will be in this scenario.

This is fuelling an expectations-management game in Westminster, which is complicated by the fact that a significant number of MPs have still to decide which way to vote. At the most catastrophic end of the spectrum for Mrs May, one leading newspaper last week cited former ministers suggesting the government could lose by around 200 votes.

Such a bracing defeat could trigger the political end-game for Mrs May, who hasn't ruled out resigning if she loses next week. Even if she decides to stay and fight a second vote, there will be new impetus behind a leadership challenge to her within the Conservative Party, new calls for a general election, and/or a referendum on the Brexit withdrawal deal.

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Should she force a second vote after a very heavy loss on the 11th, it is possible that any significant financial market volatility could sway the minds of more MPs to support her plan.

The parallel here might be the Troubled Asset Relief Programme (TARP) legislation in the United States in 2008, a key component of the-then Bush administration's measures to address the US sub-prime mortgage crisis. The legislation was initially defeated in a vote in Congress, but was passed on the second attempt soon afterward after markets tanked.

NOT AN EXACT PARALLEL

However, the parallel is not exact for at least two reasons:

Firstly, markets appear to be pricing in the likelihood that the government will lose the vote, albeit not necessarily a massive defeat.

Secondly, parliamentary procedure dictates that the government could not table exactly the same motion twice and it would need to be re-worded to demonstrate a "substantive difference".

A rosier scenario for Mrs May, which would not just bolster her position, but potentially move markets, would be a significantly narrower-than-anticipated loss, or the extremely narrow possibility of a win next week. The latter currently appears most unlikely, but nothing can be ruled out in the febrile environment of Westminster politics.

In the event of a narrow loss, it is likely Mrs May would seek to go to the European Council meeting of presidents and prime ministers on Dec 13-14 to try to get further concessions. While EU leaders have said there is no scope for further negotiation on the deal, there could be overwhelming incentives for both sides to try to get the agreement "over the line".

In the anticipated event that the House of Commons does defeat the government over the Brexit withdrawal deal on Dec 11, one further consequence will be for both sides to expedite no-deal preparations. This topic would be a key theme of the European Council meeting on Dec 13-14, including how best to mitigate some of the worst impacts, including predicted major problems at ports and other transport nodes.

UNPREDICTABLE POLITICS

It is in this scenario that UK politics will become even more unpredictable, including the significant possibility of a leadership challenge to Mrs May within the Conservative Party, new calls for a general election and/or a referendum on the Brexit withdrawal deal.

With no time before the end of March to negotiate a completely new Brexit deal, unless the Article 50 process is suspended, one other possibility is that Parliament itself takes more control of the process and there is growing sentiment in the House of Commons for membership of the European Economic Area (EEA) and the European Free Trade Association known as "Norway Plus", given that Nordic country's arrangements with the bloc.

The terms of UK membership of EEA, which Mrs May herself has sought to rule out, would be continued membership of the Single Market and Customs Union. However, the problem for UK politicians is that this would technically require free movement of people, which is considered one of the key drivers of the 2016 Brexit referendum outcome.

What this all underlines is the continuing disagreement within political elites over Brexit, more than two years after the referendum. As the debate over Mrs May's Brexit deal versus the EEA/Norway option, and indeed the mooted Canada-type agreement shows, this is not just a "Leave"-versus-"Remain" debate. This is because even those who voted to exit the EU in 2016 did so for diverse and sometimes divergent reasons, which makes fashioning support for a withdrawal agreement very difficult.

Some "Leave" voters of an isolationist bent, for instance, focused on perceived costs and constraints of EU membership other than immigration and sovereignty. And then a significant slice of the electorate voted to exit as a protest against non-EU issues such as the domestic austerity measures implemented by UK governments since the 2008-09 international financial crisis.

However, other Leavers voted in 2016 for an alternative vision of a buccaneering global United Kingdom that could, post-Brexit, enable the nation to secure new ties with countries outside of the EU. It is many of these people - who favour more, not less - international engagement, that now want to see, for instance, new trade deals with key Asian markets like China and India, the Gulf states and mature markets such as the United States and Australia.

So there was not, and still is not, a consensus over any specific version of Brexit, whether the prime minister's vision, or harder (akin to Canada) or softer (akin to Norway) versions. And the continuing divisions within the electorate on these issues are underlined in polls which now generally show more people favouring EU membership than not, and the country split over whether maintaining access to the European Single Market, or being able to limit migration, should be the key objective in Brexit negotiations.

Taken overall, Mrs May is now besieged on multiple fronts, and it appears most unlikely she will win Dec 11's vote. This will inject a new element of uncertainty into UK politics, which could yet see her ousted from power, a Brexit withdrawal deal referendum, and/or a general election in short order.

  • The writer is an associate at LSE IDEAS at the London School of Economics

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