TM will survive unless angry Brexiteer and Remainer MPs number more than half the party (159 MPs). That’s unlikely. Instead they will seek to frustrate the Chequers “Brexit In Name Only” deal via parliament. Blow-up of No Deal still on track for Q3.
(Also, here is a reminder of David Davis’s failed 2005 leadership bid…)
- Silence so far from the other big Brexit beasts, specifically BoJo and Gove. DD has already announced he wouldn’t be running for leader (although things can change), so the Brexiteers need a candidate to rally round. JRM would be the obvious choice. He wrote in the Telegraph today that he would be voting against the Chequers Plan.
- But he is a divisive figure. There are Brexiteer MPs for whom JRM goes too far, and he’s certainly too far for the pragmatists/Remainers. They would fear the membership could vote for him if he made it into the final round of the leadership contest. And so they would prevent that contest ever taking place.
- If the Leader of the Conservative Party doesn’t resign then 15% of Tory MPs must submit letters to the backbench 1922 committee to bring a Vote of No Confidence against her. With up to 60 MPs in Jacob’s Brexit-loving European Research Group, there’s more than enough to get 48 letters to go in. But TM would need 159 MPs (half the parliamentary Conservative party) to be forced out.
- If TM survives a No Confidence vote, they don’t get to call another one against her for 12 months. If she doesn’t, then it goes to the ballot of MPs to pick 2 choices, which then go to the party membership.
- We then get weeks if not months of the UK being leader-less as the clock ticks down. The March 2019 date could of course be delayed, but it’s not clear the public would be happy about any of this. They have had 2 years to get their Brexit sh1t together, after all. Would the general public ever forgive the Conservative Party for this abnegation of duty?
- Not to mention that the leader would ultimately be chosen by only ~125,000 people. Could the general public stomach that, in our pan-global era of foot-stamping demands for democracy?
- This has always been the calculus behind those who may not like TM but see no other alternative. Try and take her down and be branded saboteurs not just of Brexit but of Britain. At least half the party would not want to take that risk, therefore she could survive a no confidence vote; therefore no point in bringing one.
- Unless you’re an ideologue who wants to stamp on history that you didn’t agree with any of this: the hardcore Brexiteers and Remainers will still be interested in bringing a vote. But together they are no more than half the Party.
- And so we are in a stalemate
- Unless public opinion changes. As we wrote on Friday, people are not all that happy with the Brexit process, and now we have England in the semi-finals of the World Cup along with the biggest heatwave for decades. The general public right now would simply say “is David Davis our new left back? Pass me a beer mate”. Theresa May is consistently out-polling Corbyn as best candidate for PM, although a third of the country aren’t sure who would be best (or more likely don’t give a ….).
- TM meets the Conservative Backbencher committee. No doubt this will be tough but will the MPs be able to agree amongst themselves? If they bring the vote of no confidence and she wins it, they can’t challenge her again for 12 months. Better instead to try to do battle in parliament on the detail of the policy.
- The PM’s Chief of Staff, Gavin Barwell, has invited Labour MPs to a briefing on the Chequers deal today at 2.45-3.30pm. If you can’t rely on your own side, threaten them with numbers from the other.
The Chequers deal has annoyed both Brexiteers and Remainers. Therefore, it’s the least worst solution.
- For Conservatives, neither side has the numbers to replace the PM with one of their own. There is (not yet) a clear new rallying uniting figure.
- For Labour, they can let the Tories tear themselves apart over Europe (again), but they have their own divisions
- Everyone is waiting to cover their own back and emerge victorious from the ensuing mayhem. That means no-one lights the fire, they wait until afterwards to blame someone else for starting it
GBP is therefore understandably unmoved. Not to mention that our old friends PermaQE and PassiveMoneyMerryGoRound mean that unquantifiable risks are going under the radar. If TM survives the next 24 hours without any big resignations then she stays. We move forward with Brexit In Name Only, leaving the antagonists on either side who despise that outcome with the only option: go for No Deal. We continue to believe this will come into full relief in October as increasingly desperate Remainers and Brexiteers go for broke. At which point GBP assets should contain a significant risk premium. GBP/USD can go from 1.3000 to 1.4500 before that happens.