30 Jan

ABCC Brexit Update – 30 January 2019 - Theresa May Secures Parliament’s Backing to Renegotiate Irish Backstop

Theresa May Secures Parliament’s Backing to Renegotiate Irish Backstop

By Paul O’Hagan, ABCC General Manager (VIC, SA, WA)

Summary

  • After the historic loss in the House of Commons on her Brexit Deal earlier this month, PM May announced she would reopen Brexit negotiations with the EU.
  • In what has been a successful night for PM May, MPs have voted on a series of amendments to her Brexit Deal.
  • With the support of backbench Conservatives and the Democratic Unionist Party (DUP) MPs, the House of Commons voted 317 to 301 for a Government supported amendment to renegotiate the Irish Backstop – the most controversial element to May’s Brexit Deal.
  • Whilst not binding the Government, MPs also voted for an amendment to block a ‘no deal’ Brexit.
  • Attempts to pave the way towards a second referendum along with an amendment to postpone Brexit by extending Article 50 were defeated.
  • Claiming that there is ‘now a new route to Brexit’, May has pledged to hold a second ‘meaningful vote’ in the House of Commons on her Brexit Deal ‘as soon as possible.’  
  • If successful, May will go to Brussels to seek concessions from the EU on the Irish Backstop, claiming Parliament has expressed its will on Brexit.
  • Reaction from EU leaders was swift with EU Council President Donald Tusk saying, “The Withdrawal Agreement is not open for renegotiation.”
  • Opposition Labour leader Jeremy Corbyn has now agreed to meet with PM May to seek a way forward on Brexit.
  • Following the defeat of the amendment to extend Article 50, the Pound Sterling suffered its biggest lost of the year so far, slipping 0.8% against both the Euro and U.S. Dollar.
  • 57 days remain until the UK is scheduled to leave the EU on 29 March 2019.

A Successful Night for PM May

Following the historic defeat of her Brexit Deal on 15 January, PM May returned to the House of Commons on 29 January ahead of a series of votes on amendments to her Deal.  Speaking to MPs ahead of the votes, PM May announced she would reopen Brexit negotiations with the EU with the intention to renegotiate or seek concessions over the Northern Irish backstop – the most controversial element to PM May’s deal.

As a reminder, under the terms of the Withdrawal Treaty negotiated between the UK and EU, the ‘backstop’ would require the UK to remain aligned to the EU’s Customs Union until a solution is found to avoid a hard-border between Northern Ireland and the Republic of Ireland.   This was unacceptable to pro-Brexit Conservative MPs and rejected in the 15 January vote.

The Brady Amendment

In what has been a successful night for PM May, MPs voted 317 to 301 for a Government supported amendment, tabled by Conservative MP Sir Graham Brady.  The amendment instructs the Government to return to Brussels to renegotiate the backstop issue.  Separately, Downing Street detailed three options to do so:  seek a unilateral exit mechanism from the backstop; seek a time limit for the backstop; or adopt a plan to ‘recast’ the backstop as a type of future free trade agreement. 

The amendment was passed with the support of PM May’s backbench MPs and MPs from the Democratic Unionist Party (DUP).  This is significant as until now, PM May has been unable to unite her party on her Brexit strategy.  Furthermore, May can claim that she has obtained Parliament’s authority in any renegotiation with the EU.

Other Amendments

In recent weeks, there has been growing speculation of the prospect of holding a second referendum should PM May be unsuccessful in securing parliamentary agreement on Brexit.  However, in separate votes held on Monday evening, MPs rejected attempts to pave the way towards a second vote.  Furthermore, an amendment tabled by senior Labour MP Yvette Cooper to extend Article 50 and remain in the EU if no deal is reached by 26 February was defeated by 322 votes to 290.

A separate amendment tabled by Conservative MP Dame Caroline Spelman was passed by the House by 318 to 310 votes.  Although not binding on the Government, Spelman’s amendment rejects the UK leaving the EU without a deal.  Some commentators claim that this could tie the hands of PM May in negotiations with the EU.  PM May has consistently claimed, however, that she does not favour a ‘no deal’ result.

Reaction to Today’s Votes

Following the passage of Brady’s amendment, Labour leader Jeremy Corbyn finally agreed to meet with PM May to discuss a way forward on Brexit.  Corbyn had refused to meet with May until she took the ‘no deal’ option off the table.

Reaction from EU leaders was swift with EU Council President Donald Tusk saying, “The Withdrawal Agreement is not open for renegotiation”.  Similar reactions were received from European Commission President Jean-Claude Juncker and the leaders of France and Ireland.

Despite the reactions from EU leaders, commentators note that today’s votes can be viewed as a rare success for PM May.  In uniting her party for the time being, May claimed there was ‘now a new route to Brexit’ and pledged to hold a second ‘meaningful’ vote on her Brexit deal, with the inclusion of today’s amendments, ‘as soon as possible’.  If successful, May would then return to Brussels for further negotiations on the backstop.  Despite the insistence by EU leaders that the Withdrawal Treaty is ‘not open’ for renegotiation, some commentators note that there may be scope to draft a separate agreement, alongside the Withdrawal Agreement, taking into account the concerns of Parliament.

Market Reaction

Following the defeat of the amendment to extend Article 50, the Pound Sterling suffered its biggest lost of the year so far, slipping 0.8% against both the Euro and U.S. Dollar.

The ABCC and Brexit

The ABCC will continue to follow these developments closely in the coming weeks and months.  We look forward to keeping members up to date with the very latest from London and what it possibly means for the Australian-British business community.  

If you would like to receive more frequent Brexit updates or have any questions, please feel free to contact our office on abcc@britishchamber.com.

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