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September 27, 2018

Two ways out of the Brexit impasse

We keep hearing the phrase from commentators and politicians that there is no majority for a hard Brexit in the House of Commons. At the Labour party conference, Jeremy Corbyn underlined his opposition to such an outcome and promised to do whatever it takes to stop a hard Brexit. His preferred method is a general election. This is indeed one of two plausible outcomes. Labour would campaign in favour of a customs union agreement. In that case, Labour’s commitment to a referendum would end because it is contingent on no election being held. 

Could there be a deal with Theresa May in power? A threat to call elections remains her strongest card. Under the Fixed Term Parliaments Act, the prime minister can no longer simply call elections when it pleases her, but has the power to initiate the process if she manages to get a two-thirds majority in the House of Commons. Her Chequers proposal is opposed by two factions in her own party - the proponent of a Canada deal and those in favour of a customs union and/or Efta/EEA membership. Both sides have the numbers to block any agreement. But as Amber Rudd, the former home secretary, rightly pointed out in an interview on ITV last night: when May comes home with a deal, the debate is likely to shift. A deal creates its own dynamic.

The real political problem for May is the EU’s open hostility towards Chequers. It has unwittingly strengthened the position of the Brexiteers in their demand for a Canada-type deal. May is resisting this option for now because an FTA would necessarily trigger the Irish backstop and create a customs border inside the UK.

The Times reports this morning that there are reservations inside the cabinet about her strategy to confront the EU with a take-it-or-leave-it strategy and take this to the brink. The opposition comes from cabinet ministers who are in favour of a Canada deal. These ministers include Dominic Raab, Jeremy Hunt, Michael Gove and Sajid Javid - four of the five most important ministers.

Rudd said in an ITV interview yesterday that there are about 40 Tory MPs, herself included, willing to block a Canada-deal, which means it would not carry a majority in the parliament. But we note that her statement about a deal creating its own political dynamics also applies to her own position. If May were to conclude, at the end of the day, that a Canada deal is the only option to prevent a cliff-edge, and if she can secure some technical fudges on the border, then a re-branded Canada deal might be a way forward. To confuse everybody, it could be called Chequers-Plus.

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