Could This Be The Death Knell For Brexit?

"Could This Be The Death Knell For Brexit?" by business consultant and former CEO, Denyse Whillier | After a slew of resignations in response to Theresa May’s ‘Chequers deal,’ where do we go from here? |  Could This Be The Death Knell For Brexit?

Yesterday Boris Johnson quit as foreign secretary, claiming in his resignation letter that the UK was headed “for the status of a colony” if Theresa May’s soft Brexit plans are adopted. Johnson was the third minister to quit in 24 hours following Friday’s ‘Chequers deal.’

While on a personal level, I was pleased to see Johnson gone, these are volatile and uncertain times and we are at a critical stage in our negotiations with the E.U. With a divided government and lame duck Prime Minister, I've been wondering whether this is the death knell for Brexit?

In normal circumstances, no Prime Minister could survive seven cabinet resignations in as many months. In addition to her Foreign Secretary and the Brexit Secretary, Theresa May has lost - among others – her Defence Secretary, Home Secretary and de facto Deputy Prime Minister. She squandered her parliamentary majority by calling an unnecessary election. And according to my sources at Westminster, the government is paralysed by Brexit with no other business getting done. There’s little to no capacity to deal with the issues that were the catalyst for the Brexit vote.

CAUGHT IN AN IMPASSE

Nevertheless Theresa May muddles on, “held hostage and chained to the radiators in No 10”, as one former cabinet minister puts it, by her party’s inability to decide who should replace her. Even if the requisite 48 MPs do write to Sir Graham Brady, chairman of the 1922 Committee, demanding a vote of confidence in her leadership, May would almost certainly win it.

The party is caught in an impasse. The Brexiteers who fear her successor would be pro-European, and the Remainers who are equally worried that a leadership contest would be won by a hard line Eurosceptic. “They can wound her but they can’t kill her,” is the assessment of a well-connected Tory MP. Another insists that “only the lunatics want a leadership contest.” In my experience, those who hold extreme views are all too often lunatics.

Meanwhile Theresa May’s authority is in shreds at the very moment when she needs to assert herself in negotiations with the E.U. Talks between Britain and the E.U. are scheduled to resume next week. Michel Barnier, the E.U.’s Chief Negotiator, has publicly welcomed May’s proposals, but he stopped a long way short of accepting them. “We will assess proposals to see if they are workable & realistic in view of #euco guidelines,” he wrote in a tweet.

IS THE PENNY DROPPING?

As May explained to the House of Commons on Monday, she’s dealing with “the practicality of Brexit” rather than the dream. Over the past few months, the penny is starting to drop that making a clean break with the E.U. will wreak havoc on Britain’s economy. If the Brexiteers achieve the clean break they’re seeking, businesses based in the United Kingdom would be deprived of free access to the European market and the extensive supply chains that many of them have established in the E.U.

For a long while after the Referendum, the scale of this problem was obscured because many businesses maintained a diplomatic silence. But over the past few weeks, a number of major manufacturers, including Airbus, BMW, and Jaguar Land Rover have indicated that, in the event of a hard Brexit, they would have no choice but to move their factories and investments out of the U.K. The Flintshire community of Broughton is terrified that history will repeat itself if its Airbus wing production plant is closed. Broughton’s community was devastated when the steelworks were closed in 1980 and its employees sacked.

THE DILEMMA

The dilemma facing May’s government is that to maintain the “frictionless” access to the E.U. that business wants, the U.K. will have to adhere to many of the European Union’s rules and regulations even though it will no longer be a member. Norway has been living with such an arrangement for decades. But Johnson and his supporters regard ‘the Norway model’ as a betrayal of British sovereignty.

The arrangements May is seeking under the ‘Chequers deal’ go far beyond the Norway model. Given that the E.U. is keen to discourage other member countries from following the Brexit example, there is little to no prospect that the E.U. will agree to any of them. In return for unfettered access to the European market, Norway accepts the free movement of European workers across its borders. It is also subject to thousands of E.U. laws, and it pays hundreds of millions of dollars each year to some of the Union’s poorer countries, an option that the Brexiteers are unwilling to countenance.

WHAT OF THERESA MAY’S FUTURE?

Trying to predict how long May can remain in office is a fool’s errand. On Monday, there was speculation that Boris Johnson’s resignation signified a potential challenge to the her leadership of the Conservative Party. In 2016, after the Leave vote prompted David Cameron to resign, Johnson toyed with running for the top job, but he backed out after deciding that he couldn’t win. (And after he was stabbed in the back by his friend and fellow Leave campaigner, Michael Gove).

On Monday, after speculation that close to the required 48 MPs had written to Sir Graham Brady (the chairman of the 1922 Committee) demanding a vote of confidence, a spokesperson for May told reporters that she would fight any leadership challenge rather than resign. Allies of the Prime Minister expressed confidence that she does have the votes needed to fight off any challenger, and even Jacob Rees-Mogg, a prominent hard-Brexit supporter, has said that he doesn’t think there would be enough support to force an immediate vote of confidence on May’s leadership.

The European Research Group, chaired by Rees-Mogg, has a decision to make. Do they try to rally the 48 names needed to force a vote of no confidence in May? Or do they wait for a time when she is less likely to see off a challenge? Conservative party rules say that there can be no further challenge for 12 months, making biding their time an attractive option. While Rees-Mogg almost certainly has the votes to trigger a vote of no confidence, crunching the numbers, it's highly unlikely such a motion would succeed.

Without the support of Johnson, Rees-Mogg and the European Research Group, the most likely scenario is that May will have to rely on support from the opposition parties as she goes forward. This however could precipitate a split in the Conservative party. “If the government plans to get the Chequers deal through on the back of Labour Party votes, that would be the most divisive thing it could do,” Rees-Mogg warned, “and it would be a split coming from the top, not from the members of the Conservative Party across the country.”

WHAT NEXT FOR BREXIT?

The Leave campaign was a protest movement that suddenly and unexpectedly found itself in power, and with power comes responsibility. In their roles as Brexit Secretary and Foreign Secretary respectively, David Davis and Boris Johnson have had every opportunity over the past two years to produce a workable plan and deliver Brexit. Although they will no doubt endeavour to portray themselves as victims in this whole sorry mess, they are in fact mendacious cads who failed to keep their promises.

The crisis now unfolding is the direct consequence of a divided government. Theresa May has successfully kicked the can down the road on multiple occasions to date, but she’s finally run out of road. The only solution is to throw the question back to voters on the terms of the final deal in a new referendum, and ask them to tell the government what they want - which increasingly looks like remaining in the UK. The alternative will otherwise be a general election.

How delicious is the irony that the resignations of Johnson and Davis may actually have increased the chances of Brexit being overturned?

Question: Will your business be affected by Brexit? My team loves reading your feedback so please do take a moment to share let us know your thoughts in the comments box below.

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