Nothing. Has. Changed? Part V

  1. The EU27 has offered the UK an extension until 31st October:
    • which can be ended at any time a deal is done
    • there will be a review at regular EU Council Summit on 20-21 June
    • if the UK doesn’t take part in the European Parliamentary elections it must leave on June 1st without a deal
  2. This is shorter than EU Council President Tusk had recommended and is a compromise between Germany’s year-end suggestion and France’s hardline stance of pre-European Parliament elections
  3. It is the worst of all worlds:
    • Removes time pressure to force a decision but doesn’t quite provide enough time for air to clear through a General Election or Second Referendum
    • A conclusion any time in 6 months along with cliff edge on 1st June makes it very difficult for businesses to plan ahead
    • With Party Conference season in Sept/Oct, it’s not clear anything will be sorted before the Conservatives choose a new leader
    • Nor long enough to be clear that EU will be dealing with Jeremy Corbyn
  4. It is the most inconclusive of fudges
  5. But we do now know:
    • There are now two No Deal cliff edges of 1st June and 31st October
      • A mechanism for No Deal has now been introduced, by not participating in European Parliament elections. Brexiteers could bring Vote of No Confidence in Govt on 22 May, for example:
    • Extensions can be long and can be numerous – Risk of No Brexit has increased
  6. Expect political paralysis in the UK for the next six months:
    • Fear of Boris means Remainers won’t depose May, while Fear of a Remainer means the Brexiteers in Cabinet won’t move either
    • Keeping TM running the Brexit process benefits Labour, who can keep the focus on her inept leadership and split Party while avoiding that spotlight being shone upon them
    • Remainers and Brexiteers can use the delay to embolden momentum for their cause: voter anger to rise both for those who now want to jack in the whole process and for those who want to walk out with No Deal
    • TM will not herself resign as she is Brexit Project Manager: She still has Plan A, pass a deal, and she won’t give up. In her press conference she confirmed again that she wants to leave before 30th June. Expect MV4 and more in the next few weeks.
    • She is still trying to balance both halves of her party:
      • Making the extension flexible to be ended at any time, not just at the one review date as the EU27 initially suggested
      • Confirming the importance of trying to avoid European Parliamentary elections by making that a staging post
    • It works in everyone’s favour to blame TM for everything. She’s inflexible in cross-party talks, or over the backstop. She goes back on her word. She’s responsible for a Bad Brexit. Or for leaving with No Deal. Or ultimately for not leaving at all. 
    • No one is incentivised to come to TM’s rescue, so the stalemate will persist
  7. This is not positive for the UK economy or UK assets in the long run. Bad decisions will be made, or worse, no decisions at all. And meanwhile the future of the UK’s relationship with its closest trading partner is no clearer than it was two and a half years ago…
  8. Final point – House of Commons order paper for tomorrow adjourns business until 23rd April, aside from a business motion tabled for 5pm, which could require MPs to sit on Friday 12th April. Time for TM to force one last meaningful vote before the Easter holiday….??

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