What happens next: Brexit, Theresa May, and the Pound
A defeat was predicted, but the margin was humiliating for Prime Minister Theresa May. Last night's historic loss by a majority of 230 MPs allowed Jeremy Corbyn to table a vote of no-confidence against the government, which will be voted on tonight.
Realistically, it's unlikely to be supported, given it would need members of the Conservative Party or Democratic Unionist Party to vote against their own government. However, Jeremy Corbyn could place further motions of no-confidence on the table in the weeks ahead. If a no-confidence vote were to be successful, it’s possible a general election would be called, and the UK would need to extend Article 50.
What happens next?
If there’s no further progress, the UK may leave on the 29th March with no deal. However, given the vote in early January to limit the Treasury’s power to raise taxes, it’s likely MPs would fight against a no-deal scenario.
The problem with Theresa May’s quest to come up with a suitable deal for Plan B, is there’s no quick solution to the Irish backstop, which was a major sticking point during negotiations. Even if May did get some kind of reassurances on the backstop, it’s not to say it would be enough to win MPs around on her deal. Furthermore, would the EU be willing to renegotiate? If not, the government would be left to consider a no-deal exit, another election, referendum, or another vote of no-confidence. If the EU were willing to negotiate again, despite saying May’s current deal is the best one possible, an extension of Article 50 would probably take place before MPs vote on the deal once more.
It takes time to hold another referendum, so an extension of Article 50 would be needed to make it happen. There would be a number of weeks to get the legislation passed, followed by another 12 weeks for the electoral commission to test the question, another 10 weeks—which is the minimum requirement—to allow a regulated campaign to take place, followed by the time it takes for the result to be enacted.
Again, to hold a referendum it would need to be backed by MPs. If it weren’t, the government would be back to the four other options of no deal, general election, no-confidence, or renegotiations.
Another snap election
The UK has already voted in one snap election in the past two years, and there’s the possibility of another. Theresa May might decide that the best way to break the impasse is to ask MPs to call for a general election before the next scheduled one in 2022. For this to happen, two-thirds of MPs would need to back the idea, and an extension of Article 50 would be needed.
Can Brexit be cancelled?
This is probably the least likely event, at least until other avenues have been exhausted. Unlike the request for an extension, the UK could cancel its bid to leave the EU without the approval of all the other EU countries. If Theresa May chose to resign at any point, the Conservatives would need a new leader, who might want to undo Brexit. MPs could also pass a ‘censure motion’ which could pressure May to resign.
If you’d like to discuss moving your money abroad during tonight’s vote of no-confidence, we’ve extended our opening hours so you can transfer your funds as political developments unfold. Contact us on +44 (0)20 7989 0000 to speak to one of our Dealers and find out more about protecting your funds from further losses.