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Brexit Note

Brexit continues to tie the Government and Parliament alike up in knots. This week the Prime Minister lost a vote on her Deal but won one on the Confidence of the House in her Government. So, we are at a Parliamentary impasse. There is a majority in the House for leaving the EU as per the Referendum and there is a majority for not doing so without a Deal in place. The latter fact has made many commentators, and certainly the markets, more positive about avoiding a No Deal Brexit. However, there is no majority in the House for any particular outcome and, Article 50 having been triggered – with the support of both Government and Opposition in 2017 – the default position is that the UK leaves the EU without a Deal on the 29th of March.

Tuesday’s vote, would seem to indicate that the Prime Minister has run out of road in relation to the Deal that was negotiated before Christmas. A defeat of 230 is so large as to surely render it dead; impervious to tweaks and further (minor) EU concessions. However most of the those who have met her since have said that she regards her red lines as inviolable which would seem to render any meaningful compromise impossible. Any forward movement would seem to be contingent on the Government accepting a Customs Union of some sort but that would rule out the much vaunted ‘Independent Trade Policy’ that is pretty much the only prospective economic benefit of Brexit. (That this morning’s papers are full of a leak highlighting the failure of the Department of Trade to organise the rolling over of existing Trade Deals may not be entirely coincidental.)

A Customs Union and remaining closely aligned to the single market, (a variety of Norway in the current jargon) from the point of view of Advanced Manufacturing is the least-worst option.

Some Parliamentarians have grandly spoken about taking control of the process, perhaps quietly abetted by moderates in the Cabinet, but although parliament can very effectively block things, as it has shown, it is far harder to see how it can propose and see through initiatives – that is the job of the Government, something which Ministers have sharply pointed out to the Speaker over recent weeks.

MTA Position

The MTA will continue to press for as close a relationship to the Single Market as possible in order to enable supply chains to be maintained and our trading relationships to be protected. We remain of the view that No Deal would be a disastrous outcome, with no transition in place we would crash out with a crunch and – perhaps more importantly – our long term competitiveness in relation to our nearest neighbours and biggest trading partners would be substantially impaired.

Brexit Podcast - https://lnkd.in/err7Mxj