Earlier this evening, the House of Commons voted in favour of the Withdrawal Agreement if there are ‘alternative arrangements’ made to the current Northern Ireland ‘backstop’ provisions. This now provides the UK Prime Minister with the required majority to return to Brussels to try to re-open negotiations with the EU in order to secure a ‘legally binding change’.
This vote is a significant next step on the road to Brexit however there are likely to be many twists and turns before a potentially amended deal arrives back in the House of Commons for a second ‘meaningful’ vote.
The first hurdle presented itself almost immediately, with the President of the European Council, Donald Tusk commenting that the current plan is "not open for re-negotiation" and "remains the best and only way to ensure an orderly withdrawal of the United Kingdom from the European Union".
As it currently stands, the Withdrawal Agreement provides for three main things that matter to businesses and employers:
- a guaranteed right to remain for EU citizens currently working and living in the UK (and anyone arriving during the transition period);
- a transition period, from 29 March 2019 to 31 December 2020 during which access to markets, programmes and regulatory regimes will remain largely unchanged. This can be extended for another two years to December 2022; and
- the main sticking point of a guarantee of a permanent open border between Ireland and Northern Ireland.
See ‘what the backstop’ means here
In addition to the main vote, there were a number of amendments also voted on within the House of Commons. Most notably, Labour’s Yvette Cooper’s amendment to extend article 50 was rejected and the Spelman amendment, which called for the UK government to rule out leaving without a deal, was passed. This amendment currently has no legal basis and as such ‘No Deal’ remains the legal default.
With time ticking towards ‘Brexit day’ on the 29 March, there are still some bumps in the road to be expected and organisations should continue their planning.
What does this mean for business and other organisations?
- 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…
- 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.
- 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?
- If nothing else, plan for No Deal: and work out when you need to implement plans to ensure ongoing business continuity.
- Get match fit: focus on the business basics: cashflow; retaining and attracting talent; sweating your assets; meeting customer needs; and removing unnecessary costs
At this stage, we still do not know what the final destination will be for the UK and all focus is now be on Brussels and what the UK Prime Minister, Theresa May can re-negotiate on the ‘backstop’.
Organisations should continue to track developments and anticipate future changes in the business environment. As Brexit continues to unfold, Grant Thornton will continue to provide up-to-date advice and support for all our clients.