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April 02, 2019

Meaningless II

We have been writing all along that the real Brexit choice is Theresa May’s deal - perhaps with an amended political declaration - versus no deal. A long Brexit extension would, in our view, require either a second referendum or a general election. Yesterday’s indicative votes demonstrated that there is no majority in the House of Commons in favour of a second referendum. And, in the current state of affairs, the Tories are in no position to fight an election. 

The meaningful vote will come back for the fourth time this week. Compromise is still possible. Even if the House of Commons cannot agree on a specific future relationship, it might still be able to agree on a procedure. We expect May to give parliament a greater say in the bilateral negotiations on the future relationship. Given the narrow majorities and deep divisions in UK politics, greater parliamentary involvement would also be in the EU’s interest. Nobody wants three or five years of trade negotiations scuppered by a hung parliament at the very end.

We think that support for a second referendum has now peaked. One of the unintended consequences of last night's vote was that it pitched various soft-Brexit groups against one another. Stephen Kinnock, for example, expressed disappointment because he and other single-market supporters reluctantly supported the second referendum in the hope that the second referendum supporters would return the favour. But they didn't. They are as extremist as the far right Tory Brexiters who now deliberately want to drive Britain off the cliff. We doubt that Kinnock would support a second referendum again.

But therein lies a chance for May, perhaps the last one. If she can persuade her cabinet to back an opening of the process, she might be able to entice some of the frustrated customs-union and single-market supporters - especially those within the Labour Party who oppose the second referendum.   

The presence of a narrow path does not mean it will be taken. As the Times reports, a majority of cabinet ministers now favour leaving the EU with no deal. In the parliament, the number of Tory MPs happy with a sudden exit has swollen to about 200. This is obviously not a parliamentary majority, but it is big enough for the Tories to self-destruct. If you listen to some of the language from Tory MPs - unsuitable for print - it is quite possible that even the compromise we have suggested might fall short of a majority. 

Another intruding factor is the Tory party’s creeping loss of its parliamentary majority. Last night they lost Nick Boles, who along with Kinnock proposed the single-market compromise. The nominal majority is getting waver-thin. 

No matter what happens now, there will be further resignations - from the cabinet and from the party. Elections are becoming likely, not because anyone wants them but because a vote of no confidence will eventually succeed. 

What troubles us is the following consideration: from a narrow party-political point of view, the Tories might now conclude that a no-deal Brexit is the only way out of this mess. Our biggest fear for next week’s EU summit is that EU leaders will bounce the ball back to the UK at the final minute. With the summit scheduled for April 10, there would be a window of two days until the scheduled Brexit date, during which the House of Commons may have a chance to vote on unilateral revocation as the final way out. 

The result is that the probability of no deal has risen. We have been arguing for some time that the risk is material. But even now, we are not ready to elevate it to the single most likely outcome. If May can win over 30-40-odd Labour MPs, she will get the deal over the line.

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April 02, 2019

What will come out of the grand débat?

With less than one week to go Emmanuel Macron has not yet decided what to announce at the end of the grand débat. No door is closed just yet, and no predictions are possible at this stage. Macron might make up his mind at the very last moment or even wait until the summer, according to Le Journal du Dimanche

It is not that there is a lack of proposals on the table: there has been a wave of new proposals since January, mostly around tax justice. There is also an agenda in place: today, MPs will debate the themes of the grand débat and Édouard Philippe is expected to present something when he appears in front of the lower and the upper houses of parliament next week. But the president may decide not to go for a big-bang announcement. 

Some Macronistas are already working to deflate expectations by arguing that the gilets jaunes are not representing France, nor do those who participated in the grand débat. The last two weekends have been quieter with fewer protesters after a spike of violence which prompted Macron to get tough on security. Also, there is the urgency of dealing with the pension reform, which could interfere with the grand débat measures. 

Can Macron afford to wait until the summer or to do nothing until the pressure decreases? After all Macron promised concrete outcomes at the beginning of this extraordinary exercise in participatory democracy. Without some tangible results there is a risk to disappoint not only a few but the many.

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