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LAST NIGHT’S VOTE: The government was defeated by a majority of 27 (329 vs. 302) on the Letwin amendment which seeks to change the rules of parliament on March 27 in order to provide time for lawmakers to debate and hold indicative votes. It is worth noting that three junior ministers resigned in order to vote in favour of the Letwin amendment. Furthermore, MPs voted (311 vs. 314) against the Beckett amendment (F) which called on the government to seek parliament approval on a no-deal if an agreement is not reached 1 week before the Brexit date, while the Labour amendment (D) to provide parliamentary time for lawmakers to find a majority for a different approach on Brexit was not moved. Following last night’s developments, Goldman Sachs analysts maintained their Brexit probabilities (PM May deal ratification 50%, no-deal Brexit 15% and no Brexit 35%) whilst stating that they are skeptical that this week’s votes will prove conclusive.
TODAY’S SCHEDULE (GMT):
Morning – Emergency Cabinet meeting
- 18:00 – ERG meeting
WHAT’S NEXT: In light of the Letwin amendment passing, on Wednesday 27th March, MPs will vote on a series of options to establish what could command a majority in parliament. The result of any such indicative votes would not be binding on the government as it goes against the Tory manifesto. There is no official list of options, although one has been generated by the Commons select committee for exiting the EU.
1. PM MAY’S DEAL: The deal has been rejected twice already by parliament but remains the only deal the EU can quickly ratify and therefore remains an option. If voted on, it will attract support from May loyalists, but DUP and ERG remain opposed.
2. NO DEAL BREXIT: This would lead to the UK leaving the EU on the new revised date of April 12th on WTO terms. HoC have twice voted against this option, albeit by only four votes last time.
3. ELIMINATING A BACKSTOP: This, in theory would mean re-writing the Withdrawal Agreement, something the EU repeatedly dismissed. A variant would be to promote “alternative arrangements” i.e., technology to monitor the flow of good that could replace the backstop. The EU have previously agreed to examine this, although implementation could take years.
4. CANADA-STYLE DEAL: A popular idea with hardcore Brexiteers, this would focus on the future trade deal with the EU rather than the Withdrawal Agreement. In theory, the UK would accept no continuing regulatory alignment with the EU, although is unclear how far the EU is willing to negotiate this. However, this would not solve the impasse regarding the Northern Irish border, nor has there been signs of many Labour are willing to support this.
5. NORWAY-PLUS DEAL: This soft-Brexit alternative would keep the UK in the single market by remaining in the European Economic Area (EEA) and European Free Trade Association (EFTA). Unlike EFTA, the deal would also keep the UK in the customs union (hence the plus). The deal has been promoted by a group of Tory backbenchers, Labour leader Corbyn has also shown some interest and some believe it would be the most popular option given a free vote. The Sun reported last night that over 100 are ready to back this deal after PM May’s deal is killed off.
6. LABOUR DEAL: This would mean the UK remains in a customs union with the EU and remain close to the single market. European Council President Tusk has previously deemed this as “promising”, although the plan was rejected by parliament. The Labour deal is unlikely to attract support of the Conservatives.
7. SECOND REFERENDUM: A replay of the 2016 referendum would be a separate option although nobody in parliament is seriously calling for that. However, a referendum could be attached to one of the options above. When a second referendum was put on PM May’s deal before the HoC this month, only 85 MPs voted for it after labour ordered its MPs to abstain.
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Author: Tyler Durden