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December 10, 2018

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ECJ says UK free to revoke Article 50, even inside extension period

The European Court of Justice agreed with the advocate generate and went further by allowing revocation to happen even inside any extension period. This was one of the open questions.  rules this morning that the UK is free to revoke, without reservation, but it added a bullet in the same way as the advocate general did. Readers should focus on this because it will constrain the policy options go forward. It is best quote the ruling itself:

"That possibility exists for as long as a withdrawal agreement concluded between the EU and that Member State has not entered into force or, if no such agreement has been concluded, for as long as the two-year period from the date of the notification of the intention to withdraw from the EU, and any possible extension, has not expired."

This ruling is a clear victory for those who have campaign for a Brexit revocation, but it is not clear that it will make much political difference. We now know that it is possible, and that a second referendum would have a legal basis in European law. One important obstacle to this process has been removed.

What does the ruling say about the option of revoke and relaunch Article 50? The press release does not go into the subject of good faith - as the advocate general in his reasoning. We simply do not know at this stage how to interpret the ruling in this respect - revoke and re-trigger Article 50 is unlikely in our view in any case.

Tomorrow's scheduled vote in the House of Commons is giving rise to the biggest political uncertainty in UK politics since the mid-1970s. Theresa May's political demise could be close, but it is also possible that the EU may throw her a lifeline. Wolfgang Munchau writes in the Financial Times that the EU could offer three specific actions. The first and least controversial would be to open up the political declaration and to allow alternative future relationships, like the Norway option. But he argues that the heavy lifting will have to come from two other measures. One is a re-negotiation of the Irish backstop to protect both sides against foot-dragging by the other side, and to provide a more credible procedure to avoid the prospect of a permanent lock. This is a genuine concern, political as well as legal. And finally, the EU will need at one point to rule out any readiness to extend Article 50. For as long as Remainers believe that they can get a second referendum if they reject the deal, there can be no majority in a favour of a deal. 

Will this be enough to save May? The weekend has been full of speculation that she could postpone tomorrow's vote, as the Daily Telegraph reports, and of an imminent leadership challenge if she loses, as the Times writes. 

The Times writes that the previously elusive 48 letters are likely to come in this week. We argued before that the lack of a successful challenge in the past should not be read as a sign of the rebels' weakness. They retreated tactically because they were not in a position to defeat her four weeks ago. 

It is unusually hard to predict the course of events given the large number of possible scenarios. It is also possible that she might resign; or that she calls elections in the event of a big defeat. Or that she goes back to Brussels to renegotiate the deal, with a demand for the Irish backstop to be dropped or amended, which would drag the process out well into the new year. 

Alternatively, she could put her weight behind a second referendum. But we don't see the maths for it. If she did, there would be an imminent leadership challenge, which she may lose. If tomorrow's vote goes strongly against her, Labour might bring a confidence motion against her government. One theoretically possible scenario would be a government of national unity, or what the Italians call a governo tecnico. But we struggle to see why Jeremy Corbyn would support it. He made it clear over the weekend that he first wants to get into power, then re-negotiate Brexit from a position of power. This makes sense to us.

As ever, it is best to assess uncertain situations like these in terms of the protagonists' best interests. May cannot conceivably retreat from a deal that has been the one and only achievement during her two years in office. She could re-open the negotiations and take the issue to the brink, and maybe she could survive a no-deal Brexit. We struggle to see her interest in a second referendum as this would split the party and raise the risk of a leadership challenge beforehand. There is also not much support in the public for her deal. Corbyn has an interest either in immediate elections, or in the threat of a chaotic no-deal Brexit that would drive moderate Tories to the Labour Party. 

Our other stories

We also have stories about the conservative opposition to the new CDU leader; on the gilets jaunes as a turning point in Macron's presidency; about China adding Portugal to its Belt and Road initiative; on exports slowing down eurozone growth; on the debate on a eurozone fiscal capacity; on the end of the Belgian government coalition; and on government and opposition promising more handouts to the Greeks.

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