From Chequers to Brexit: An educated guess

With the Article 50 deadline less than half a year away, and with both the Labour and Conservative party conferences behind us, the time is right to ask where the Brexit negotiations stand and what deal can be expected to be reached come March.

From Red Lines to Chequers

With the Brexit date looming, Westminster seems to have moved towards a softer approach to leaving the EU. From the prime minister’s vision for Brexit presented in  Lancaster to that in Munich and now Chequers, Theresa May has moved away from red lines, conceding to partial regulatory alignment, future contributions to the EU budget, ECJ jurisdiction, and some coordination in trade deals. Having had no success in cracking the unity of the European Union—as most recently demonstrated at the informal Brexit Summit in Salzburg—her room for manoeuver vis-à-vis the EU today is severely limited, and her Chequers plan heavily contested at home.

Party functionaries from the major UK parties had the chance to clarify their position on—and often opposition to—the Chequers approach at the recent party conferences. “Chequers” does not currently enjoy a parliamentary majority of 320 votes. Of the 315 Conservative MPs, 176 backed remain. Even more vocal opposition to Chequers comes from the hard-line “Brexiteers”. Boris Johnson recently called the approach “entirely preposterous” and “deranged”. The self-appointed spokesman for the hardliners, Jacob Rees-Mogg, and his European Research Group have also been outspoken in favour of a “Canada Plus” style Brexit based on exiting the single market and the customs union cleanly. Theresa May has rejected this proposal, which would leave the question over the Irish border unanswered—its success would likely spell the end of her premiership. However, this proposal is even less likely to attain the required votes in parliament: Labour has already proclaimed its opposition to any deal that would take the UK out of the customs union, and much of the Conservative party would agree.

But Labour has equally rejected the Chequers proposal and is threatening to push for a snap election should no better deal be presented. Such an early election seems unlikely as it would require a two-thirds majority in the House of Commons or a vote of no-confidence and the subsequent failure to form a new government within 14 days. A divided Conservative party stands to gain nothing in a snap election and would certainly reject it.

More likely is—one dares not say it—a second referendum. Having been dead in the water just a few months ago, the proposal now boasts prominent supporters such as London’s Major Sadiq Khan and even three government ministers are reported to privately endorse the idea. A YouGov poll from July showed that for the first time, more people supported a second referendum than opposed it. Should Labour decide to push the issue, it would only require 17 Tory rebel MPs to establish a parliamentary majority.

A second referendum would certainly raise numerous political and legal questions. It would require at least six months of preparation and therefore an extension of Article 50. The legality of such a request is still an open question. Ironically, one could imagine Nigel Farage bringing the case in front of the ECJ. More practical questions arise: what question would be asked on the ballot? Would there be a “remain” option? How would the European Union react to such a delay?

With no majority and a disorderly exit looming, parliament will be inclined to vote for a soft Brexit. This would keep the UK inside the customs union and eliminate the need for a hard border in Ireland or the Irish Sea. Parliament has a natural majority for a soft Brexit and is filled with “remainers”. Labour has announced support for such a deal under certain conditions. Lastly, the fear of a “no deal” Brexit is a powerful motivator to establish a parliamentary majority for whichever deal is presented.

The EU’s Response

How would the EU react to a soft Brexit? Although showing good faith—German Chancellor Angela Merkel recently promised “all our force and creativity” to finding a solution—May’s Chequers proposal found little sympathy in Salzburg and was explicitly rejected by the Union’s chief negotiator, Michel Barnier. While some elements of the proposal are deemed workable, some fundamental conceptual problems remain. Selective access to the single market—free exchange of goods but not of services, and limited movement of people—is perceived in Europe as exactly the type of “cherry-picking” that is to be avoided at all costs. Politically, it would signal to other Eurosceptics that better deals are possible outside the Union. Economically, it would raise questions of the competitive advantages of union if a country could trade freely in the common market without having to adhere to the same regulations. Procedurally, it would give the UK parliament the possibility of vetoing agreements struck between the EU and the UK. A free trade agreement appears to be the best option to resolve the three issues above. But it would leave the Northern Irish border question unanswered. The agreed backstop has recently again been called into question and both parties are still miles apart on a solution.

Game theorists might predict that an agreement will be reached at the latest possible moment, but agreeing on Brexit is not a quick matter. The exiting agreement needs to be ratified both by the House of Commons and the European Parliament. In the meantime, entire industries, from banking to farming, rely on certainty about the future. This provides a strong impetus to conclude an agreement well before the deadline. The October summit was long envisioned to be concluding act of the negotiations, but on the eve of that meeting it is already being reported that an emergency summit in November is in the making. A summit of last chance could conceivably be scheduled for January or February, but the question looming over the conclusion of any agreement is at what point a majority in the House of Commons can be found to agree to anything.

The path towards Brexit thus is still unknown. “Chequers” faces hurdles at home and in Brussels as core issues remain unresolved. Although political rationality suggests a soft Brexit to be the most likely option, it remains to be seen what final agreement will be able to satisfy the wide range of political and economic demands in both Westminster and Brussels.

Marcel Hadeed is a Dahrendorf Research Associate at the Hertie School of Governance.

This blog is based on the discussion at a recent event hosted by the Dahrendorf Forum at the Hertie School of Governance

Photo by Michael Coghlan via Creative Commons.

The opinions expressed in this blog contribution are entirely those of the author and do not represent the positions of the Dahrendorf Forum or its hosts Hertie School and London School of Economics or its funder Stiftung Mercator.