What happens now?

The announcement of the Withdrawal Deal has triggered a very uncertain process which is changing by the minute. One thing seems sure – the parliamentary process is going to be critical.  Here is an explanation of how the process works.

With last night's political sanction of the deal in the UK, the EU27 are expected to push ahead with an extraordinary European Council Summit on 25 November 2018, at which EU27 leaders will be asked to sign off on the deal.  There is scope for further changes to the text between now and then as a result of political concerns in the EU27 capitals, although the EU Commission reportedly stressed to Member State ambassadors on 13 November 2018 that the deal was "settled".  If on 25 November political agreement is reached by both the UK Government and the EU27, the UK Government is expected to present the deal to the UK Parliament for a "meaningful vote" in early December 2018.

Speculation as to what happens then has already been filling the press for weeks.  At present, with both Brexiteer and Remainer MPs coming out against Theresa May's deal, the possibility of Parliamentary endorsement of the outcome of the negotiations looks more remote than ever.  However, in spite of the many vocal critics, the Prime Minister remains staunchly optimistic that she can get the deal through.

The House of Commons' meaningful vote on the deal looks set to be the most significant moment in UK politics since the EU Referendum itself and a moment of reckoning for the UK's warring political factions.  The stakes could not be higher: any deal cannot be ratified by the UK unless and until the House of Commons has voted in favour and passed an Act of Parliament implementing it into UK law. 

The implementing Act would need to become law before March 2019 to avoid the UK inadvertently leaving the EU without having properly implemented the deal.  Even if the House of Commons votes narrowly in favour of the deal in the meaningful vote, the passage of such a controversial and highly technical Bill through Parliament will present many opportunities for spoilers on both side of the Brexit divide to threaten the deal being realised before Brexit day.  Meanwhile, the European Parliament would also need to vote by simple majority on whether to consent to the deal, which is expected to take place in March 2019.

If the House of Commons votes down the deal, under s. 13 of the EU Withdrawal Act the Government has 21 days to present a way forward to be voted on by the House of Commons.  Similarly, if no deal is reached before 21 January 2019, the Government must make a statement in Parliament saying what it proposes to do next.  In both cases, if the Government's plan for how to proceed is also rejected by the Commons, we are in General Election or second referendum territory. 

Under the Fixed Term Parliaments Act, a General Election can be triggered only when:

1.  the House of Commons carries a motion of no confidence in the Government and does not pass a second motion within 14 days endorsing a new Government; or

2.  the House of Commons votes by a two-thirds majority for a General Election.

Holding a second referendum would require an Act of Parliament.  Such an Act would provide the basis for the referendum campaign and set the question to be put to voters.  Given the Government's current stance firmly against a second referendum, this is only likely in the event of a clear vote in Parliament in favour of holding a second referendum or a new Government coming to power on the basis of a promise to hold one.  The terms of the referendum campaign, covering issues such as campaign expenditure rules, the franchise and particularly the options put to voters, would be highly contentious and could take time to pass through Parliament, as was the case with the EU Referendum Act in 2015, which took just under seven months to become law.  

If it gets to that, it is highly unlikely either a General Election or a second referendum could be held in time without an extension to the Article 50 period.  Such an extension would require a unanimous vote of the EU27 and the UK at a European Council summit.  Without an extension, this could mean the UK crashing out with no-deal before a General Election or second referendum is held.

That being the case, it is significant that, in the lead-up to yesterday's Cabinet meeting, Downing Street briefed that the deadline for the UK Government to trigger the implementation of no-deal preparations is 1 December 2018.  Even if political agreement is reached between the governments of the UK and the EU27, the risk of a no-deal Brexit remains until the deal is finally signed, sealed and delivered.  The meaningful vote is the key remaining hurdle; prudence suggests that at least until then both sides will need to continue practical preparations to mitigate the most immediate consequences of a no-deal Brexit.

Businesses can afford some cautious optimism that a route out of Brexit uncertainty that avoids the cliff edge of a no-deal Brexit is beginning to appear, but many obstacles remain.  Our message to businesses continues to be: "prepare for the worst, hope – and advocate vigorously – for the best".

The key documents, including the Draft Withdrawal Agreement and Political Declaration can now be found here.