Another busy Brexit week has turned last Thursday’s outcome on its head. Brexit is now delayed until the 12 April at least, but the risk of the UK crashing out of the EU still exists and once again the action will return to the UK Parliament next week for another vote on twice rejected EU-UK Withdrawal Agreement.

Vote on the EU-UK Withdrawal Agreement

• On Monday (18 March), the UK Parliament speaker, John Bercow, blocked an anticipated third vote on the EU-UK Withdrawal Agreement, stating that “substantial changes” would need to be made to the proposal, which had already been comprehensively rejected by MPs the week before, in order to reintroduce it for a third vote.
• This vote is now expected to take place next week. UK Prime Minister Theresa May announced on Wednesday (20 March) that she will introduce new domestic legislation to the Withdrawal Agreement package, aimed at protecting the UK’s internal market, in order to make the necessary “substantial changes” to bring the agreement back to the Parliament. This domestic legislation could potentially be linked or indicating a change to the No-deal Tariff Guidance published by UK authorities last Wednesday.

Brexit Delay

• On Wednesday, May wrote to the EU to formally request a three-month extension to the UK’s membership of the EU (to the 30 June). Unexpectedly, she did not request a potential longer extension in the event the Withdrawal Agreement is not approved next week by the UK Parliament, writing that she did not believe it would be in the best interest of either party for the UK to participate in the European elections this May, thereby excluding the possibility of a longer extension.
• The EU27 Leaders discussed this extension in Brussels last night, and unconvinced by May’s plan (or lack thereof) to ensure the approval of the Withdrawal Agreement in the UK Parliament next week, agreed a strategy for both outcomes:
  • If the Withdrawal Agreement is approved there will be an extension until the 22 May. This is to provide the necessary time for the UK Parliament to pass all the related legislation to complete the ratification process. In this case, the transition period would kick in on the 23 May. The 22 May was chosen as it is the last day before the opening of voting for the European elections.
  • If the Withdrawal Agreement does not pass however, an extension until the 12 April will be allowed. By this date the UK will need to indicate to the EU their new Brexit strategy – be it a permanent customs union, a second referendum, a no-deal, etc. The UK Parliament is expected to hold indicative votes on these options on the first week of April, in order find a majority for one way forward. The UK can then agree to a longer extension, to negotiate and implement this proposal. Or if it decides on a no-deal, this becomes our new “cliff-edge” date. Why the 12 April? It’s the last date by which the UK government has to give legal notice on whether it will hold EU elections. If the UK hasn’t agreed to hold elections by this day then a long extension will not be possible. EU 27 leaders agreed to hold another summit “around” this date to order to discuss these next steps.
• The importance of the European elections on 23-26 May and the selection of dates for the UK’s exit based on their participation or not in these elections’ hinges on the legal requirement within the EU treaties that all EU countries hold elections. If an EU member does not, the new Parliament cannot be legally constituted and in turn the other institutions would be legally blocked.

• EU Leaders also formally approved the “Strasbourg Agreement”, the additions to the Withdrawal Agreement and Political Declaration on the Future EU-UK Relationship announced last Monday and outlined in last week’s Brexit Briefing.
• EU Leaders were keen to stress that they are continuing their no deal preparations and stated again that there will be no renegotiation of the Withdrawal Agreement. However, they highlighted that they haven’t closed the door on tweaks to the Political Declaration on the Future Relationship.

Overall, last night’s decision by the EU Leaders is a very positive one for Irish and EU businesses. A no deal Brexit on the 30 June would have been a real possibility under May’s proposal, if she once again loses the vote next week. The EU’s proposal leaves the possibility of an orderly transition open, while also providing a more stable parliamentary process and a window for the UK Parliament to forge a new way forward.