Brexit Business Brief | Perhaps the UK will leave with a deal on 29 March 2019

Written on 27 Feb 2019

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The timetable from here

Following the UK Prime Minister’s statement in Parliament on 26 February 2019 (read it here) and a vote in Parliament the following day, the Brexit timetable now looks like this:

 

Step 1 By or on Tuesday 12 March A ‘meaningful vote’ in the House of Commons to approve the Withdrawal Agreement and Political Declaration. If passed, the UK leaves the EU with a deal on 29 March 2019 (or more likely, a couple of months later, so the necessary UK implementing legislation can be passed).
If not passed, go to Wednesday 13 March.
Step 2 Wednesday 13 March A vote in the Commons to approve leaving the EU without a deal. If passed, the UK leaves the EU without a deal on 29 March 2019.
If not passed, go to Thursday 14 March.
Step 3 Thursday 14 March A vote in the Commons to approve an extension to the Article 50 period. If passed, the UK government must request an extension from the EU27. The EU27 would then have to agree unanimously to that request.
If not passed…actually no one has really talked about that because everyone is assuming it would be passed. If it isn’t, it is a bit of mess and I guess the logic is that the default applies and the UK would leave without a deal on 29 March 2019.

 


How long would an Article 50 extension under Step 3 last?

The Prime Minister tried to rule out an extension lasting beyond the end of June 2019: “An extension beyond the end of June would mean the UK taking part in the European Parliament elections.”

 


So the no deal cliff edge is just moved back to the end of June 2019?

That is what Mrs May argued : “…the House should be clear that a short extension – not beyond the end of June – would almost certainly have to be a one-off. If we had not taken part in the European Parliament elections, it would be extremely difficult to extend again, so it would create a much sharper cliff edge in a few months’ time.”

The thinking being, the EU27 would not agree to a further extension after June, as that would – for one thing – possibly bring the legal standing of the then newly-constituted European Parliament into doubt i.e. the UK would still be a Member State but would have no MEPs. And also, frankly, everyone would just be fed up of the whole thing by then.

However, it may well be that pressure is exerted both from the EU27 and from Remainers for the extension to be much longer. So for a number of reasons, it is by no means nailed on that an extension specifically to the end of June 2019 is going to happen – if, as I discuss below, there is an extension at all.

 


Is an extension even that welcome for business?

Well, yes, of course it is, for one thing it gives longer for everyone to attempt to get their no deal ducks in a row.

But for those businesses which have put in place no deal plans, it becomes even more of a muddle. For example, many businesses have stockpiled goods and supplies ahead of 29 March. That’s working capital sitting in warehouses. What do they do – use those goods now, and re-stockpile ahead of the end of June?

Another example: many businesses have put in place travel bans for staff for the start of April, so they can be on hand to deal with no deal crises. In some cases, staff have been asked not to go on holiday. What happens to those plans, are they rearranged to the end of June? And so on.

 


Perhaps the UK will leave with a deal on 29 March 2019

It remains government policy that the UK will leave with a deal on 29 March 2019. So it will whip its MPs to vote in favour of the deal on Tuesday 12 March (or whenever that ‘meaningful vote’ takes place). Some Brexit-supporting Labour MPs may well also do so.

The DUP has been coy as to its intentions of late; is it coming round to voting in favour, assuming some sort of tweak to the backstop is achieved?

If the DUP votes in favour, do all but the hardest of hardcore Brexiteers in the ERG then decide that they have got as far as they can, and vote in favour? Mr Rees-Mogg seems to be hinting at this (FT, paywall).

That would likely be enough to get the meaningful vote passed.

And so suddenly and unexpectedly, the UK then would be leaving with a deal on 29 March 2019 (or, as I say above, a couple of months after that, to enable the implementing UK legislation to be passed).

 


The UK government’s no deal paper for business

DExEU has finally published the government’s 15 page no deal overview, ‘Implications for Business and Trade of a No Deal Exit on 29 March 2019‘.

I very much recommend this paper.  It is an excellent summary of the overall position.

 


Read more Brexit Insights from Osborne Clarke

What would a no deal Brexit mean for business regulation? Our latest Regulatory Outlook looks at what a no deal Brexit would mean, across 15 areas of regulation, for both UK businesses trading in the EU and for non-UK businesses trading in the UK.

Could Brexit-related disruption amount to frustration of a contract? Probably not, following the High Court’s judgment in the European Medicines Agency case last week. As we discuss in this Insight, the English law doctrine of frustration is construed narrowly, and the circumstances in which it will be triggered by Brexit-related events are likely to be rare.

 


Too much?

As the Brexit endgame may, or may not, be approaching, I hope to produce this Brexit Business Briefing newsletter more frequently – you can subscribe here.

 


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