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UK Parliament rips up Brexit deal and sends May back to talks

Jan 30 2019 07:35
Tim Ross, Robert Hutton and Alex Morales, Bloomberg
Britain's Prime Minister Theresa May speaks during

Britain's Prime Minister Theresa May speaks during a press conference inside 10 Downing Street on November 15, 2018. (Photo by Matt Dunham - WPA Pool/Getty Images)

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Theresa May promised to go back to Brussels to re-negotiate Brexit after Parliament ripped up the deal she’s spent the past year and a half stitching together.

On a rare good night for the UK prime minister, she won the backing of members of Parliament for her Plan B - to scrap the most difficult part of the divorce package and re-open talks with the European Union.

May chose to tear open the exit deal to unite her divided Conservative Party. But with just eight weeks until Britain is scheduled to leave the bloc -- and the EU opposed to changes -- the premier faces a mountainous task delivering on her pledge. The pound fell as Parliament rejected an attempt to extend that exit day deadline, raising the chances of a chaotic no-deal split.

“There is limited appetite for such a change within the EU and negotiating it will not be easy,” May told the House of Commons as she promised to re-write the deal. But it is now “clear” that there is a route to a “substantial and sustainable” majority in Parliament for a revised agreement, May said.

May is expected to return to Brussels to begin her work within days. At home, her political rival, Labour leader Jeremy Corbyn, bowed to pressure and agreed to meet her to discuss a way forward.

Top of her list of changes is an overhaul of the back-up plan for the Irish border. This was always the most contentious part of the exit package, and the EU has warned repeatedly that it’s not up for renegotiation.

Minutes after the votes, May received a sharp reality check. EU President Donald Tusk reiterated that the deal, including the much-loathed backstop, is “not open for renegotiation.” But he left the door open to changes to the non-binding declaration on future relations, if the UK changes its red lines. Among the conditions May has refused to give up are a refusal to be part of EU’s customs union or accept free movement of people.

Tusk said the EU would consider a delay to the exit day deadline, "taking into account the reasons for and duration.” May hasn’t ruled out an extension, but at least for now she’s sticking to the plan to leave on time.

Possible Compromises

The EU is serious about refusing to reopen the deal, but that doesn’t mean it won’t offer May anything. Diplomats say there are a variety of options for agreements that could lie alongside the deal and could even be legally binding. For example, an obligation for the bloc to prove it’s making its best efforts to negotiate a post-Brexit trade deal. But diplomats acknowledge this might not be enough for UK politicians.

Unless May and the EU can agree on a compromise - and get it through the British and European parliaments - the UK will tumble out of the bloc without a deal. That would risk a recession in Britain and a hit to house prices and the pound, according to authorities in the UK.

May won on Tuesday after persuading staunch Brexit-backers in her Tory party to give her what they called “one last chance” to deliver a deal they will support.

Previously, euro-skeptic members of May’s Conservative Party have been angry that her proposed deal ties the UK too closely to the EU’s trade regime indefinitely, through the Irish border backstop.

If she fails to get the changes they want, these pro-Brexit Tories warned they won’t back May’s deal next time it comes to a vote. She has promised to give Parliament a final say on any new terms she secures next month.

While May can see Tuesday’s votes as a victory, for business, the frustration is mounting.

“Government and parliament are still going round in circles when businesses and the public urgently need answers,” British Chambers of Commerce Director General Adam Marshall said in a statement. “The real-world result of Westminster’s interminable wrangling is market uncertainty, stockpiling, and the diversion of staff, money and investment.”

Stephen Martin, head of the Institute of Directors, said in a statement that every passing day without a resolution forces more companies to bring in "unnecessary and costly contingency plans."

theresa may  |  uk  |  eu  |  uk economy  |  brexit
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