Brexit deal rejected again – what happens next?

Last night MPs voted to reject Theresa May's proposed Brexit deal by a majority of 149, and as before, the sticking point seems to have been the Irish backstop.

Many Brexit-supporting MPs and the DUP had said they would not support the amended deal unless it set limits on the backstop, and Geoffrey Cox, the Attorney General, advised yesterday that the amendments to the Withdrawal Agreement had no legal force and could result in the UK staying in the customs union indefinitely.

Rejecting the deal means that MPs will vote tonight (Wednesday 13 March) on whether to rule out a no-deal Brexit. However, even if Parliament votes to reject a no-deal Brexit (as many sources seem to think it will), this would not guarantee that the UK would leave the EU with a deal. Any new deal would need to be agreed with the EU, who are not keen to renegotiate. If MPs vote to reject no-deal, they will vote again tomorrow (Thursday 14 March) on delaying Brexit.

At the moment four 'options' are likely:        

  1. No-deal Brexit
  2. Negotiating a new deal (with or without option 3)
  3. Delaying Brexit
  4. Revoking Article 50 and remaining in the EU

No-deal

Currently, if the Government cannot negotiate a deal with the EU which Parliament will accept, the UK will leave the EU on 29 March 2019 without an agreement or any transition period. Trade between the EU and UK will operate according to World Trade Organisation rules. The Government has said that it would temporarily apply zero tariffs to most imports in the event of a no-deal Brexit.

Some MPs, including both Eurosceptics and former remainers, have proposed an arrangement known as the "Malthouse compromise".  This would involve standstill agreements, an extended transition period and a new 'backstop' which would include a free trade agreement. The proposals allow for different eventualities under 'Plan A' (a formal agreement) and 'Plan B' (an informal agreement which retains Plan A as an option).  However, EU Chief Negotiator, Michel Barnier has stated that without the Withdrawal Agreement there is no "legal basis" for a transition. This suggests that the EU would not accept the Malthouse proposals.

Negotiating a new deal

Although this is possible, it is unlikely that May will be able to negotiate a new deal with the EU before 29 March – particularly since there is no consensus within Parliament on what deal would be acceptable. Parliament will therefore vote on option 3:

Delaying Brexit

May has suggested that if MPs reject a no-deal Brexit, it may be possible to agree a delay to the UK's exit from the EU in order to negotiate further changes to the Withdrawal Agreement and gain Parliamentary support. Guy Verhofstadt, the EU's Brexit Co-ordinator, has said that he would oppose any delay to Brexit which was not based on an agreement within Parliament on the form of the Brexit deal.

There may also be problems with a delay to Brexit if it extends beyond the date of the European Parliament elections on 23-26 May and the UK does not participate. Legal advice to the German Bundestag suggests that the UK could face legal action for violating citizens' rights to vote and stand in the elections.

Revoking Article 50

It is still possible for Parliament to revoke Article 50 and remain in the EU, and there have been calls for a second referendum. However, as with negotiating a new deal, it seems unlikely that this could be completed before the 29 March deadline, plus there is uncertainty about the extent of popular or Parliamentary support for remaining in the EU.

All four possibilities are tabled as amendments to tonight's vote. This may provide a more transparent picture of the next stages in the Brexit saga – but only if Parliament can reach an agreement.

For more information on this topic, please contact Harriet Eversett, Paralegal or Fiona Pearson, Senior Consultant in Michelmores' Commercial & Regulatory Disputes team.