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Press Release

Brexit deal rejected

Peter Legge Peter Legge

Making sense of political chaos

Earlier this evening, the House of Commons rejected Theresa May’s Brexit deal by a crushing margin of 230 MPs.

With just ten weeks to go before Brexit day (29 March 2019), we still have no agreement on what Brexit will be. We are living through a period of significant political volatility and uncertainty. We stand on the threshold of a huge change to the UK’s economy and society but we still do not know exactly what form that could take, how fast it could happen and how big a change it may be.

The possible outcomes are actually widening, not narrowing, the nearer we get to Brexit day. 

What happens next?

On Wednesday (16 January), Parliament will debate the motion of no confidence as brought to Westminster following the vote by the Labour leader, Jeremy Corbyn.

In addition, the Government is now required to come back to Parliament within three ‘sitting days’ (i.e. by Monday 21 January) with a proposal on what to do next on Brexit. MPs will vote on this and may seek to amend the proposal to instruct the government on what it should do.

The scale of the defeat in parliament means we may see some radical responses and rapid political manoeuvrings beginning with the vote of no confidence and a group of MPs may now declare in favour of a ‘Peoples Vote’. Add another faction of MPs (across party) who may push for a ‘Norway Plus’ Brexit (singe market and customs union membership) and there is likely to be support to emerge too for delaying Brexit by extending Article 50. 

We may see MPs and even Cabinet Ministers pressing for ‘indicative votes’ in Parliament: a series of votes to find out what (if anything) could be supported by a majority of MPs. Cabinet unity will be tested: with some minsters possibly calling for No Deal or a ‘People’s Vote’. Theresa May’s own ministers may now urge her to adopt a radical change of plan or resign. The next few days will be volatile and we can also expect Parliament (backbench MPs) to increasingly seek to take leadership of the process.

The options ahead are set out in this flow diagram.

As you can see, there are many different potential outcomes. The default remains a ‘No Deal’ Brexit: unless MPs can agree on something (and the EU agrees too), then we will leave the EU on 29 March with No Deal. We are currently headed straight for No Deal; a majority of MPs have to change course to divert us from this destination.

What does this mean for business and other organisations?

  1. Don’t wait for the politicians to reach an agreement. By the time this political deadlock breaks, it will be too late to make contingency plans for 29 March. So…
  2. If you can, plan for all eventualities. If you haven’t already, do some scenario planning, assessing how the different options impact on your organisation, your markets and suppliers. We can help and there are more things you can do whatever stage you are at in your Brexit planning
  3. Identify opportunities that uncertainty and disruption in the market create: where are your competitive advantages; how can your goods or services help others navigate this uncertain time; are there opportunities to increase exports in the rest of the world or acquire undervalued assets?
  4. If nothing else, plan for No Deal: and work out when you need to implement plans to ensure ongoing business continuity.
  5. Get match fit: focus on the business basics: cashflow; retaining and attracting talent; sweating your assets; meeting customer needs; and removing unnecessary costs.

We will keep you updated on developments as they happen over the coming days and weeks. We will be sharing practical examples of what other organisations are doing to prepare, including ‘no regrets’ decisions you can take now and contingency plans you should have in place.