March 18, 2019
May's deal still on the table. Don't rule it out.
Another cliffhanger Brexit week, or perhaps not. Perhaps the biggest news we read this morning is the suggestion by Boris Johnson that he might, just might, back Theresa May's deal on condition that the next round of trade negotiations would have to be conducted in a different spirit - in other words, without May as leader. She will step down this year in any case, so this condition is not going to be hard to fulfil. Apart from Johnson, Tories now likely to support the agreement also include Ester McVeigh, Ian Duncan Smith, David Davies, and we think also Jacob Rees-Mogg. Some unrelenting backbenchers have declared that they will not budge. Thus there cannot be a Tory/DUP only majority. The government will need some Labour MPs to support the deal - or twice as many to abstain.
The DUP is, of course, critical. Lord Trimble, the former DUP leader, seems to have swung around in favour of the deal. The DUP leadership only said it was in substantive discussions. If they agree - we think there is a more than even chance they will - the game is wide open. Ideally the government would like this settled this week, before Thursday's European Council. If the talks with the DUP succeed, a meaningful vote could be held late on Tuesday or Wednesday. But Downing Street will need to have the numbers first, and secure some support from Labour. The thing to note with the group of pro-Brexit Labour MPs is that they will only stage a mutiny at the last minute - and only if victory is certain. No one deserts to the losing side. We think May can afford between 10-20 Tory No votes at most. We would not rule out a fourth meaningful vote next week if the numbers do not come together this week. It was always our contention that this would go to the brink.
So, what about an extension? May's gamble is to dangle the horror of a long Brexit extension in front of her own MPs' noses to pressure them to support the deal. A long extension is a death sentence for the Conservative Party. Donald Tusk's advocacy of a long extension has been useful in that respect. If feeds the conspiracy theory that the EU is plotting to keep the UK inside forever.
That said, we also think this strategy could unravel at the summit. Wolfgang Munchau lists a number of reasons why a long Brexit extension is exceedingly risky from the EU's perspective - including the impact on the balance of power in the European Parliament as the UK would have to hold elections to it - and a distraction from more important geopolitical issues. If the EU opts for a shorter extension, as we would expect, it would have less of a deterrent impact on the eurosceptics - if they expect this to result in no-deal Brexit with no possibility of extension in May or June. A short extension would still allow the UK to settle for an alternative future relationship - Norway or the single market. Changes to the political declaration do not require a long extension since the withdrawal treaty would be unchanged. The same goes for a general election. It is possible that elections could take place as early as May 2 - a date set for UK local elections. The Fixed Term Parliaments Act requires only a minimum of 17 working days between the dissolution of parliament and the elections. Elections would lead only to a one-month Brexit delay.
The Tories will probably not want to hold elections. If you look at the most recent opinion polls, their most important feature is extraordinary volatility. The polls follow the news.