A quick reminder of where things stand with the EU
The EU Council agreed a second extension to the expiry of the UK’s Article 50 notice on 11 April. That means that the UK is now set to leave the EU on 31 October, unless the draft withdrawal agreement is ratified in the meantime.
The EU has repeatedly stated that the withdrawal agreement is not up for re-negotiation, although changes to the accompanying political declaration are a possibility. As things stand, the UK Parliament has rejected the withdrawal agreement by a considerable majority. It has also rejected a no-deal Brexit, by a smaller, but still significant, majority.
What are the key dates in the run up to 31 October?
- Week commencing 22 July: Result of Conservative Party leadership contest announced
- Last week in July to first week in September: UK Parliament expected to be in recess
- 21 September to 25 September: Labour Party conference
- 29 September to 2 October: Conservative Party conference
- 17-18 October: EU Summit
How is the deadlock to be broken?
There is no sign that the Parliamentary arithmetic has shifted, and it remains unclear how the current impasse can be resolved.
It was widely predicted that following the poor showing of both the major parties in the EU Parliamentary elections, the Conservative Party would move closer towards embracing a no-deal Brexit, while Labour would come out more clearly in favour of a second referendum with remaining in the EU as one of the options. However Labour’s narrow (and unexpected) victory in the Peterborough by-election on 6 June demonstrates the need for a more nuanced analysis of the Brexit Party’s electoral prospects in the UK, and how the more established parties should respond.
Assuming the Tory leadership election runs its full course, it is likely to become the key vehicle for shaping the Conservative Party’s revised Brexit strategy. Some leadership contenders have been prepared to countenance a no-deal Brexit, at least as a last resort, while others have emphasised the need to avoid it to respect the will of Parliament and the economic interests of the UK. As the leadership election progresses, it is to be hoped that more detail will emerge on how these competing positions can be delivered in practice.
There is no space to explore all the possible permutations, but it is looking increasingly unlikely that it will be possible to ratify the withdrawal agreement by 31 October. That means that either the UK will leave the EU without a deal on 31 October, or it will have to go back to the EU. Any alternative plan for resolving the crisis would need to be sufficiently credible to persuade the EU to extend the Article 50 deadline again. That may, for example, involve asking for changes to the political declaration, with or without a second referendum. Alternatively matters could be overtaken by a General Election, but both major parties’ poor showing in the May’s EU Parliamentary elections makes it unlikely that either will wish to trigger one before the Brexit question can be resolved.
What has happened to the UK and EU no-deal preparations?
Most organisations will have breathed a sigh of relief in April when the EU agreed an extension of nearly six months to the expiry of the Article 50 notice. However, looking at the key dates in the next few months, it is hard to see how the UK will have more than a few weeks for meaningful negotiations with the EU before the latest deadline is upon us.
The Commission is expected to announce later this week that it is not planning any additional steps to mitigate the effect of a non-deal Brexit on an EU-wide level. Preparations on the UK Government’s side are likely to be intensified as the new deadline approaches. It seems unlikely that any radically new measures will be proposed, though the breathing space will be welcome. For example, it has allowed the Government to continue with the process of rolling over third party trade agreements which are currently covered by the UK’s EU membership, as well to make further progress with the lengthy project of adjusting our domestic law so that it continues to function effectively after Brexit.
What more should organisations be doing to prepare?
We believe that while certainty will continue to be in short supply in the coming months, there is still no evidence of a majority, either in the country or in Parliament, in favour of a no-deal Brexit. On the EU side there is also a diversity of views, but again most member states remain keen to reach a negotiated solution with the UK if at all possible.
With this continued uncertainty organisations will need to be as flexible and agile as possible with their Brexit preparations. For organisations that wish to revisit the plans they have already put in place, the following resources may be helpful: