Deal or No Deal - Brexit Edition

December 09, 2019
 

Catherine Stahl from the University of Illinois College of Law

University of Illinois College of Law

With the 2020 U.S. presidential election nearly a year away, let’s take a break from U.S. politics and focus on a critical election across the pond.  The United Kingdom has been deadlocked on how to “Brexit” ever since 51.9% of voters elected to leave the European Union in June 2016.  Since the Brexit vote, neither of UK’s prime ministers has been able to negotiate a withdrawal agreement with the EU that can be passed in the House of Commons.  The UK has also avoided a potentially disastrous ‘No Deal’ Brexit where the UK leaves the EU without any deal at all.  However this issue is ultimately resolved, there will be significant legal, regulatory, and economic implications.

The current Prime Minister, Boris Johnson, presides over a hung parliament, in which no party holds a majority.  In hopes of breaking the gridlock, the House of Commons is holding a General Election on December 12th.  The European Union extended the Brexit deadline through January 31, 2020.  Any action on the Withdrawal Agreement currently before Parliament has been postponed until after the December 12th election.  Here are a few things to lookout for as the election results come in:

If Prime Minister Johnson’s Conservative Party wins a majority, Parliament would likely ratify the current Withdrawal Agreement.  Under that scenario, Brexit could go ahead, possibly by the end of the month.  If the Labor Party forms a majority government, it would likely attempt to renegotiate the Withdrawal Agreement, subject to a second referendum.  The Liberal Democrats are committed to rescinding the UK’s request to leave the EU, immediately ending the Brexit process without further negotiations or a referendum.  On the other hand, the Brexit Party is committed to an immediate No Deal Brexit.

If no party wins a majority, resulting in another hung Parliament, the new government would likely consider alternatives to the current Withdrawal Agreement.  Such alternatives include maintaining a customs union with the EU (where UK would not be able to negotiate its own trade agreements with third party countries); adopting ‘level playing field’ regulations that broadly align with EU regulations on social and employment standards, taxes, competition, and the environment; or holding a confirmatory referendum for voters to choose between a specific withdrawal agreement and the alternative of remaining in the EU.  If the election results in another hung parliament, there is also risk of continuing deadlock, further delay (provided the EU consents), or a ‘No Deal’ Brexit on January 31, 2020 if no agreement is reached.  No matter what the outcome of the December 12th election, it appears a period of uncertainty lies ahead for the UK.  As Prime Minister Winston Churchill said, “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”