Tag Archives: United Kingdom

Brexit Withdrawal Agreement Overwhelmingly Rejected by British MPs

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Alicia Nicholls

With just over seventy days to go before the United Kingdom’s (UK) impending withdrawal from the European Union (EU) on March 29, 2019, British Members of Parliament (MPs) in the House of Commons voted overwhelmingly against the current Draft Withdrawal Agreement negotiated by Prime Minister Theresa May’s government. With only 202 MPs voting in favour and 432 voting against the deal, the 230 margin of defeat represents the worst legislative defeat inflicted on a British Government in modern history.

The vote, termed the ‘meaningful vote’, was highly anticipated. Originally scheduled for last December, Prime Minister May had postponed the vote at the last minute in the face of overwhelming opposition to the current deal, particularly the fall-back provisions on the Northern Ireland/Ireland Border – the so-called ‘backstop’. In the interim, Mrs. May unsuccessfully sought to obtain greater concessions from the EU in order to assuage skeptics, including those in her own party. However, the EU had been adamant that the  500-page Draft Withdrawal Agreement was not open for renegotiation.

Indeed, the reaction by the EU to the outcome has been swift. In a statement released immediately thereafter, President of the EU Commission, Jean Claude Juncker, lamented that “the risk of a disorderly withdrawal of the United Kingdom has increased with this evening’s vote.” President Juncker further reiterated that “the Withdrawal Agreement is a fair compromise and the best possible deal. It reduces the damage caused by Brexit for citizens and businesses across Europe. It is the only way to ensure an orderly withdrawal of the United Kingdom from the European Union.”

In her remarks after the outcome, Mrs. May lamented that the vote gave no indication of what the Parliament does support. She promised to continue her pursuit of Brexit as instructed by the British people in their referendum result of 2016. She has again ruled out a second referendum. However, her future appears to be in the balance. Labour leader, Jeremy Corbyn, who has called for a general election, has immediately tabled a motion of no confidence which will be debated tomorrow. In December, Mrs. May survived a no confidence motion within her own party.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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‘No Deal’ Brexit Scenario Increasingly Likely: What does this mean for CARIFORUM-UK Trade?

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Alicia Nicholls

The countdown is on. With 100 days to go before the United Kingdom’s (UK) scheduled withdrawal from the European Union (EU), and the ratification of the Draft Withdrawal Agreement less likely, both sides have this week announced contingency plans for a ‘No-Deal Brexit’. What do these recent developments mean for CARIFORUM-UK trade, not just at the policy level, but at the firm level as well?

It has been a busy week in Brexit news. After delaying the House of Commons vote on the Draft Withdrawal Agreement which was scheduled for December 11th, UK Prime Minister Theresa May this week announced that the promised vote will be held the week of January 14, 2019. In the interim, Mrs. May will be seeking to obtain additional legal assurances from the EU-27 that the deal’s ‘backstop’ provision would not keep the UK in a customs union with the EU indefinitely.

UK and EU Brexit Contingency Plans Underway

However, in recognition of an increasingly likely ‘no deal’ scenario, the May Government also announced plans to, inter alia, put 3,500 troops on standby, allocate monies from a contingency fund to key government departments, and outlined a post-Brexit immigration plan.

The EU, for its part, has sought to safeguard the interests of its own EU-27 citizens and businesses by implementing a contingency plan comprising 14 legislative measures and targeting key Brexit-vulnerable sectors. Specifically on trade, the EU noted, inter alia, that “all relevant EU legislation on the importation and exportation of goods will apply to goods moving between the EU and the UK”. In a clear signal to the May Government, the EU was quick to point out that its contingency plan is meant to safeguard EU citizens foremost, that the measures do not replicate the benefits of EU membership, and that these will not mitigate all the risks of a ‘no deal Brexit’.

Why is a ‘no deal’ more likely now?

In an article I recently co-authored with Dr. Jan Yves Remy last week, we highlighted at least four scenarios for future UK-EU relations and analysed what each scenario may mean in turn for CARIFORUM-UK relations. Brexit represents the most epochal and seismic shift in UK trade and political policy in recent history. Brexit developments remain quite fluid, but recent developments evince the increasing likelihood of the ‘no deal’ scenario.

EU leaders have repeatedly ruled out a return to the negotiating table. A renegotiated withdrawal agreement, therefore, now appears highly unlikely. Despite calls for a second referendum, including from former British Prime Minister, Tony Blair, this option has been fervently dismissed by the May Administration, which remains committed to her slogan of ‘Brexit means Brexit’, although she had been part of the ‘remain’ camp before the referendum.

Labour leader, Jeremy Corbyn, has tabled a no confidence motion against Prime Minister May which, if successful, could change the current Brexit trajectory. However, despite her current unpopularity, there is no guarantee Mrs. May would be defeated or that her successor would abandon the Brexit plans. As alluring as it sounds, a ‘No Brexit at all’, scenario, therefore, at this stage still appears unlikely.

Possible Implications of ‘no deal’ for CARIFORUM-UK trade

Due to former colonial ties, the UK is currently most CARIFORUM (CARICOM plus the Dominican Republic) countries’ main trading partner within the EU and is also one of the main source markets for tourist arrivals and foreign direct investment to CARIFORUM countries. Given these historic and economic ties, CARIFORUM and the UK are currently in the advance stages of negotiating a roll-over of the concessions under the CARIFORUM-EU Economic Partnership Agreement which currently define CARIFORUM-UK trading relations until the UK leaves the EU. While details about the roll-over negotiations have been sparse, this agreement has reportedly taken into account the possibility of a ‘no deal’ Brexit. It is in the ‘no deal’ scenario that this roll-over arrangement has its most utility as it at least assures CARIFORUM traders of continued preferential market access to the UK if the latter leaves the EU without a transition deal in place.

However, while the EPA ‘roll-over’ preserves the market access status quo, it does not mitigate all the risks of a ‘no deal Brexit’. Without a transition agreement in place, UK goods (and imported goods entering through UK ports of entry) will immediately after March 29, 2019 no longer have free circulation within the EU single market and will revert to World Trade Organisation Most Favoured Nation (MFN) levels – that is, they will be subject to EU import duties and non-preferential rules of origin. This, therefore, takes away the incentive for CARIFORUM firms which, due to a shared language and customs, would have used the UK as a ‘springboard’ for entering the wider EU market by establishing a commercial presence in the UK.

Moreover, because many CARIFORUM countries’ air and sea links to continental Europe are still mainly through the UK, CARIFORUM firms will have to consider what impact these new ‘no deal’ arrangements (such as reimposed customs duties and customs checks) may have on their trade with both UK and EU partners and on their supply chains. New arrangements for aviation and haulage between the EU and UK will also add delays and increased freighting costs. These higher costs will have to be borne in mind in business planning, pricing and other decisions.

One of the biggest threats of a ‘no deal’ Brexit is the volatility of sterling which has seen large drops in value whenever unfavourable news hits the market. If not already done, currency risks will have to be taken into account by CARIFORUM firms when negotiating commercial terms with UK trading partners and in their own risk assessments.

With regard to tourism, the reduced spending power of UK visitors to the region, or any downturn in the UK economy due to fall-out from a ‘no deal’ Brexit’, would adversely impact those CARIFORUM countries where UK tourists account for a sizable market share or where UK purchasers account for sizable real estate purchases. Changes in UK-EU aviation arrangements may also make the cost of travel to the region more expensive for those continental European travellers which have to transit through the UK to reach the Caribbean (those which do not have the benefit of direct flights). As such, it would be beneficial for CARIFORUM countries to expand their direct air and sea links with continental Europe.

In spite of the above, it is not all doom and gloom. There is the opportunity for CARIFORUM to redefine CARIFORUM-UK trading relations by going beyond the mere EPA roll-over and negotiating a new free trade agreement in the future with the new ‘Global Britain’ the May Administration seeks to advocate. It also gives CARIFORUM countries an additional nudge to expand their trading relations with the EU-27 themselves by making better use of the EPA, which is currently underutilised. This is also an opportune time as CARIFORUM, as part of the African, Caribbean and Pacific (ACP) grouping, is in the process of renegotiating a post-Cotonou arrangement with the EU.

The takeaway is that the uncertainty continues! With all the news about Brexit, it is not surprising that some firms or persons may experience ‘Brexit fatigue’. It is, however, incumbent on regional firms which currently do business with, or are seeking to conduct business with those in the UK to keep abreast of these developments and to make the necessary contingency plans to ensure minimal disruption to their trading.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Domestic Squabbles and International Blunders: Will There Be a No-Deal Brexit Scenario?

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By Renaldo Weekes, Guest Contributor 

Renaldo Weekes ping pong

Renaldo D. Weekes

The United Kingdom’s (UK) Prime Minister, Theresa May, has had her hands full ever since she took the job and began leading the Brexit negotiations. She has had to suffer through several resignations as various Secretaries and Ministers opposed her Brexit deal. More recently, she has been ensued in a serious battle with the House of Commons and, more specifically, Members of Parliament (MPs) from her own party. With the high tension squabbles that surround the Brexit deal in the UK, European Union (EU) leaders are finding it increasingly difficult to maintain confidence in May and are not willing to change any part of the current deal, much to the Prime Minister’s detriment.

No Confidence Vote

Tensions surrounding the Brexit have culminated when Prime Minister May decided to delay Monday’s Brexit vote until January. Feeling as though they have tolerated enough, her own MPs launched a no-confidence vote against her. She survived that vote and we now continue on the same path as before. Theresa May’s options remain the same, those being: succeeding with her current deal or an amended deal, holding a second referendum, unilaterally reversing Brexit, a no-deal Brexit and a relatively new option of restarting the process that inadvertently arose out of the European Court of Justice’s ruling on Monday, December 10. The no-confidence vote was merely a bump in the road for the most part and Tory MPs cannot challenge her leadership for at least another year.

Funnily enough, if the rebellious MPs won the vote, things would not have been any better. The same options would be open to the new PM and his or her team. The likelihood of each option happening would change, however, and it seems a no-deal Brexit would be even more likely. May’s current deal would be scrapped as MPs have made it clear that they do not like the deal in its current form. Holding a second referendum or reversing Brexit are not likely to happen because the MPs who challenged May are not willing to even open the possibility of slowing down Brexit. There seems to be no intent to revoke their article 50 notification because doing this may be interpreted as retreating from the battle.

Appeasing the Tories

On Thursday, fresh off the heels of her victory against the no-confidence vote, Theresa May headed to Brussels to squeeze more concessions out of the EU. Her elation from winning the vote did not last long as the EU made it clear that it will not be budging. The EU is not being stubborn for the sake of it, however. According to reports, EU leaders are not sure they can trust Prime Minister May anymore. Not because she is being underhanded but rather, she does not know what she is doing. She has offered what has been described as either vague or impossible changes that relate to the backstop on the Irish border.

One of her suggestions was to have a sunset clause on the backstop whether or not a deal is reached. This is rather dangerous because the point of the backstop is to prevent a hard border between Northern Ireland and Ireland. If the backstop deal comes to an end with no replacement, the border they were trying to prevent will be realized. Some fear that this will resume conflicts that were put to a halt 20 years ago with the signing of the Belfast or Good Friday Agreement. The fact that Tories are willing to let this happen because they want to be completely severed from the EU shows their irresponsibility. They have not suggested ways to deal with the backstop, they simply want a Brexit and they want it now. How can May really appease persons who are not suggesting a fix to the main problem? Understandably, she would try to tweak a deal that, in its current state, will not pass the House of Commons but she and the Tories must face facts. If this squabble of theirs continues, there will be a no-deal scenario.

The Wishful Immovable Object and the Ostensibly Unstoppable Force

Prime Minister May has maintained her stubbornness throughout this entire ordeal until the crucial December 11 vote came and she postponed it until January. We finally saw the ostensibly immovable object shake under pressure. This continued on when the no-confidence vote hit and she essentially begged the EU to make more concessions but they rebuffed her. May is still standing, however, and continues to dismiss the idea of a second referendum as folly even though some of her Cabinet members are reportedly flirting with the idea.

Though the Prime Minister wants to maintain the image of being an immovable object, she has been clearly rattled. There is also the impending, ostensibly unstoppable force that is a no-deal Brexit. A no-deal Brexit is not as unstoppable as it may appear. Its status as ‘unstoppable’ depends on how immovable Theresa May wants to be. If May is willing to change her position and, at the very least, holds a second referendum, it is more probable that she prevents the UK’s disastrous crash out of the EU. If she revokes the Article 50 notification, she prevents Brexit almost immediately and can even restart the negotiation process to craft a better deal.

It is sad to see the state of affairs that the UK finds itself in because of the unrealistic and irresponsible demands of some Tory MPs and a Prime Minister who is trying to mollify these MPs but, at the same time, wants to remain unnecessarily obdurate in the face of legitimate concerns about where the country is headed as the March 2019 deadline approaches. Only time will tell if things will change, whether for better or worse.

Renaldo Weekes is a holder of a BSc. (Sociology and Law) who observes international affairs from his humble, small island home. He has keen interest in how countries try to maneuver across the international political and legal stage.

ECJ Brexit Ruling: What are the implications?

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Renaldo Weekes ping pong

Renaldo Weekes, Guest Contributor 

The European Court of Justice (ECJ) ruled on Monday, December 10th, 2018, that a European Union (EU) member state has the ability to unilaterally revoke its notification of intent to leave under Article 50 of the EU’s Lisbon Treaty. This ruling comes at a time when anti-Brexit and pro-Brexit persons alike are showing great opposition to British Prime Minister Theresa May’s Brexit deal. Anti-Brexit persons, in particular, are feeling vindicated by this ruling because it allows them to double down on their stance and try to force Prime Minister May into submission.

However, the British Government stood its ground despite the ECJ’s ruling, with British Environment Secretary, Michael Gove, arguing that the British people voted to leave the EU in 2016 and it will not reverse that decision. The Government even argued that point in the ECJ case, saying it does not plan to reverse its decision so the question of whether the United Kingdom (UK) can unilaterally revoke its Article 50 notification was merely hypothetical and of no consequence.

May’s Brexit deal in more peril

Can the British Government continue to take its tough stance in light of the ECJ’s ruling and all the controversy that shrouds Brexit? Some may find it admirable that the Government is not willing to waver, even in the face of fierce opposition. At some point, however, it must face facts. Anti-Brexit lawmakers will be less likely to back down. As part of its judgement, the ECJ said that the UK’s decision to revoke their Article 50 notification reflects a sovereign decision. This has essentially put absolute power into the hands of UK Members of Parliament (MPs) to change course as they do not have to yield to the EU. There is no doubt that MPs will exercise that power. To anti-Brexit lawmakers, there are no more excuses that Prime Minister May can use to prevent a second referendum or prevent Brexit. In light of this, lawmakers are more likely to vote down on the deal; though there was no doubt that they would have done otherwise.

Responsibility and accountability

The ECJ ruling also puts ultimate accountability on the Prime Minister and her team. The European Commission and the Council argued in the court case that article 50 could not be interpreted as allowing a member state to unilaterally revoke its notification; the member state would need the EU’s permission to revoke the notification. If this turned out to be true, and the EU refused to allow the UK to change its decision, Government would have been able to argue that the EU is at fault for restricting the UK’s sovereignty. That, however, is not the case now. Should the government refuse to reverse Brexit or, at the very least hold a second referendum, there is no other institution that holds responsibility for any ensuing consequences that should come from what is likely to be a hard or even no deal Brexit.

Abuse of the process

Another possible impact of the ECJ ruling was actually cited by the European Commission and the Council during their argument to the court. They noted that if member states can unilaterally revoke their notification to leave, they may abuse that process in order to retrigger the 2 year negotiation period should the original negotiations not go their way. On the face of it, this argument may not hold much weight as there is already a process through which a member state can request an extension of the negotiating period. However, should the member state not agree to the extension period proposed by the council, it may still seek to retrigger the mandated 2 year negotiating process which forces the council into a position where it must agree to the member state’s desired negotiation period. The member state may also opt to not apply for an extension and immediately retrigger the process.

The effects that the ECJ’s ruling may or may not have on the UK and other member states notwithstanding, we must still wait to see if the British government will budge in any way as the March 2019 deadline approaches against the backdrop of MPs threatening to upend the deal and a shaky Government trying desperately to maintain its power.

Renaldo Weekes is a holder of a BSc. (Sociology and Law) who observes international affairs from his humble, small island home. He has keen interest in how countries try to maneuver across the international political and legal stage.

The Draft Brexit Withdrawal Agreement: What implications for future CARIFORUM-UK Trading Relations?

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Alicia Nicholls

After nearly two years of negotiations between the European Union (EU-27) and the United Kingdom (UK), European leaders endorsed the “The Draft Agreement on the Withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community”and the “Political Declaration Setting out the Framework for the Future Relationship between the European Union and the United Kingdom” at a special meeting of the European Council on November 25, 2018.

This process is taking place pursuant to Article 50 of the Treaty on European Union (TEU), which sets out the terms and timelines for the withdrawal of any Member State from the EU. The text of the UK’s draft Withdrawal agreement, which was released on November 14, 2018, delineates the terms of the UK’s withdrawal from the EU, while the Political Declaration outlines broad aspirations for the constitutive elements of the two parties’ future trading relationship.

This article takes a brief look at what possible implications the draft Brexit Withdrawal Agreement may have for future CARIFORUM-UK trading relations, which are currently under negotiation and are reportedly close to being finalised.

Essential Elements of the Withdrawal Agreement

The UK ceases to be an EU Member State on March 29, 2019. During the transition period (March 29, 2019 to December 31, 2020), and subject to certain limited exceptions, EU law and the EU institutions and agencies will continue to be applicable to the UK, although it will no longer be an EU Member State. The UK will, however, be ineligible to be represented on, or participate in the decision-making processes of these institutions. This arrangement was deemed necessary to ensure a ‘smooth’ transition and provide for some certainty for traders while the parties hammer out the details of their future trading relationship. The Joint Committee may extend the transition period only once and this must be exercised before July 1, 2020.

The Protocol on Ireland and Northern Ireland includes the controversial “backstop” option, whereby in the event that the EU and UK fail to negotiate an agreement which prevents a ‘hard border’ between Northern Ireland (a country of the UK) and the Republic of Ireland (an EU Member State) within the transition period, the UK will be part of a single UK-EU customs territory until such an agreement is made. However, both the EU and UK have expressly stated their intention to conclude such an agreement by July 1, 2020.

Both the EU and UK Government have openly stated that they consider the negotiations on the two agreements closed, and have argued that the deal was the best that could be achieved in the circumstances. Although EU leaders endorsed both agreements, approval and ratification by the UK parliament is also needed under the EU (Withdrawal) Act 2018. UK House of Commons support appears questionable at this stage given the fervent opposition by both Remain and Leave MPs to the current Withdrawal Agreement. The House of Commons will debate the deal on December 11, 2018.

Implications for CARIFORUM-UK Trading Relations

Traders from CARIFORUM currently have preferential access to the UK market under the CARIFORUM-EU Economic Partnership Agreement (CARIFORUM-EU EPA). While CARIFORUM-EU trading relations will remain unchanged once the UK leaves the EU, the same cannot be said for CARIFORUM-UK relations.

For most Anglophone CARIFORUM countries, the UK is their main trading partner within the EU, as well as a major source market for tourism and investment. It has been reported that UK-CARIFORUM bilateral trade totaled £2.1 billion in 2016.

Under the Withdrawal Agreement, the UK remains bound to all EU international agreements, including trade agreements such as the CARIFORUM-EU EPA, to which it is party by virtue of being an EU Member State. However, during the transition period, the UK must not engage in actions deemed “likely prejudicial to EU interests” and its representatives will be barred from participating in the work of any bodies established pursuant to such agreements, unless it does so in its own right or upon invitation by the EU. This would include any bodies, such as the Joint CARIFORUM-EU Council, established pursuant to the CARIFORUM-EU EPA.

The Withdrawal Agreement does not preclude the UK from negotiating, signing and ratifying its own trade agreements with third States or groupings, such as CARIFORUM, during the transition period. But the entry into force and application of said agreements during the transition period would be subject to EU authorization. With respect to CARIFORUM, the grouping is currently negotiating a roll-over of the EPA concessions with the UK to minimize any disruption to CARIFORUM-UK trade. Such a CARIFORUM-UK trade agreement, therefore, would be subject to EU authorization if it is to enter into force during the transition period. In any case, as noted above, the UK will remain a party to the EPA and bound to apply EPA concessions to CARIFORUM traders during the transition period.

But what about the UK’s future trading relations with the EU? A ‘no deal Brexit’ is still a possibility as the draft Withdrawal Agreement needs ratification by each of the EU 27 countries. There is also still that pesky question of the negotiation of the future UK-EU trading relationship. The Political Declaration envisions a UK-EU free trade agreement, the terms of which remain to be negotiated.

A ‘no deal Brexit’ would make it difficult for CARIFORUM firms looking to use the UK as a stepping stone to EU markets, which means a climate of uncertainty will continue to prevail for Caribbean firms seeking to use the UK as a conduit for accessing the EU market until the full details of future UK-EU terms of trade are agreed.  It was recently reported that the agreement between the UK and CARIFORUM was close to being reached and has taken into account the possibility of a ‘no deal Brexit’.

The climate of uncertainty may also impact CARIFORUM-UK trade and investment from the UK side. Although some UK businesses have by now conducted risk assessments and built in Brexit contingency plans, the continued political and economic uncertainty and volatility of sterling will continue to weigh on their export, hiring and investment decisions.

The Withdrawal Agreement takes us one step closer to some idea of what the future UK-EU relations will be, but a climate of political and economic uncertainty will remain for some time, which may have an impact on CARIFORUM-UK trading relations.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

5 things the UK’s EU (Withdrawal) Act of 2018 does

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Alicia Nicholls

After months of heated debate, the United Kingdom’s European Union (Withdrawal) Bill, more colloquially called the ‘Brexit Bill’, received the Royal Assent on June 26th, transforming it into law.

Here are five quick things the EU (Withdrawal) Act of 2018 does:

1.Defines Brexit or ‘Exit day’

The UK’s official ‘exit day’ from the EU is now defined in statute as March 29, 2019 at 11:00 pm. However, the Act allows amendment of this date via regulation to ensure it conforms with the date on which the EU treaties are to cease to apply to the UK as per Article 50(3) of the Treaty on European Union (Lisbon Treaty), that is, from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification of withdrawal unless the European Council, in agreement with the UK, unanimously decides to extend this period.

2.Repeals the European Communities Act, 1972 on ‘exit day’

The European Communities Act (ECA), 1972 provided for the UK’s accession to the European Communities. Per the EU (Withdrawal) Act, the ECA will be deemed repealed on March 29, 2019 at 11:00 pm (Exit Day).

3.Saves EU-derived domestic legislation and direct EU legislation with exceptions

The Act saves EU-derived domestic legislation and direct EU legislation which is in operation immediately before exit day, meaning it continues to have effect in domestic law on and after the exit day, but does not include any enactment in the European Communities Act, 1972 (which would be repealed). It also provides a guide for the interpretation of EU derived law.

But there are important exceptions. For instance, the rule of supremacy of EU law and the Charter of Fundamental Rights will obviously no longer apply on and after exit day. Additionally, while there is nothing preventing UK courts from having regard to EU courts’ interpretation of retained EU law, they will no longer be bound to principles decided by the European Court and will no longer refer matters to the court.

4.Parliamentary Approval Required for Outcome of EU Negotiations

The Act mandates parliamentary approval for the ratification of the withdrawal agreement and outlines a detailed process at section 13(1) for same.

5.Makes some prescriptions

With respect to the UK’s future relationship with the EU, the Act requires the Government to lay before both Houses of Parliament before the end of October 31, 2018 a written statement outlining the steps taken towards negotiating a customs arrangement as part of the post-Brexit EU-UK relationship. Another example is the requirement placed on the Government to seek to negotiate on the UK’s behalf an agreement with the EU dealing with family unity for those seeking asylum or other protection in Europe.

The full text of the European Union (Withdrawal) Act may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

PM May calls snap election: Pros and Cons

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Alicia Nicholls

United Kingdom (UK) Prime Minister, Theresa May, has today ‘reluctantly’ announced that Britons could be going to the polls in a general election on June 8, 2017, three years shy of the due date of May 2020.

The UK has a parliamentary system of government. Since 2011, parliamentary elections are fixed for every five years pursuant to the Fixed-Term Parliaments Act. However, early general parliamentary elections may be called before the five year period, inter alia, where two-thirds of the House of Commons (including vacant seats) vote in favour of same. In the UK parliamentary system (also known as the ‘Westminster System’) and in most British-inherited parliamentary systems like those in the Caribbean, the Prime Minister is not directly elected. In practice, though, it is the person who leads the party which wins the majority of seats in the House of Commons who becomes the Prime Minister.

The announcement of an early poll is surprising for two main reasons (1) it comes after months of denials by Mrs. May that she would be calling an early election, and (2) it also comes less than a month after the May Government made the UK’s notification under Article 50 of the Treaty on European Union (Lisbon Treaty) of its intention to withdraw from the EU.

Pros

So what are the upsides? Firstly, it is likely that in light of the disarray of the Jeremy Corbyn-led Labour Party, the Prime Minister is anticipating a stronger Conservative working majority in Parliament, reducing the likelihood of the final Brexit deal being voted against.

The Tories currently have a 17-seat working government majority in the House of Commons following the 2015 poll, which is a slim majority when one considers that there is a total of 650 seats in the House of Commons. After all, what Prime Minister would not want a more comfortable majority at home when facing difficult negotiations with the EU for the next (at least) two years? Prime Minister May said as much in her statement when she noted that “Division in Westminster will risk our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country”, and warned that “If we do not hold a general election now, [Opposition Party] political game-playing will continue.”

Polls already show a Tory sweep, but let us also remember polls had predicted a “No” win in the Brexit referendum.

Secondly, it should be recalled that Mrs. May became Prime Minister in July 2016 not through leading the party in a general election, but after then Prime Minister David Cameron resigned following his Brexit defeat.  If Mrs May leads the Conservative Party to victory in the June 8, 2017 poll, she would have:

(i) won a ‘direct mandate’ from the British people to pursue her own domestic agenda, which frees her from pursuing some of the policies promised by the then Cameron-led government.

(ii) This mandate, she would hope, would help quell the dissenting factions in her own party who disagree with her handling of Brexit thus far.

(ii) She would not be legally required to call another general election until June 2022, by which time the messiness of Brexit would be largely past (hopefully). Recall that Brexit negotiations could be extended up to 4 years, at which time the May Government would not wish to negotiating a final deal with the EU-27 while having to worry about an election at home which could be lost due to an unpopular final deal.

A third pro is likely economic. Although predictions of a British recession following the Brexit vote have not come to past, there is no telling what would happen to the British economy once the Brexit negotiations are underway. It makes more sense for Mrs. May to seek an election now than wait until things take a turn for the negative.

Cons

Firstly, on the flipside, calling a snap election after having made the Brexit notification and ahead of the negotiations with the Europeans risks adding even more uncertainty to an already uncertain political climate.

Secondly, although polls favour a Tory win, what happens if the polls are wrong and the Tories lose to an anti-Brexit Labour?  Or what if Labour and the Liberal Democrats expand their number of seats, further reducing the already slim Tory majority?

Thirdly, she risks dealing with ‘voter fatigue’.

Calling the election at this time is a risky move but one, which like all high risks, could have big rewards if the May-led Tories win and expand their mandate. In anticipation of a Tory win, markets took the news of the snap election quite enthusiastically. Sterling appreciated  against the US dollar to 1.26. However, it is also potentially a big gamble and the decision to hold the poll after triggering Article 50 is curious. It will be up to British voters to decide whether to reward or reject the gamble.

What is next?

When the House of Commons meets, they will need to deliberate and vote (as required under the Fixed-Term Parliaments Act) on whether they are in favour of an early election. A two-thirds majority will be needed. For his part, Labour leader Mr. Corbyn has supported the decision to go to the polls in his statement released on his official Facebook page following the Prime Minister’s announcement.

For Prime Minister May’s full statement, please see here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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