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March

MPs dump no-deal Brexit – maybe!

Published: Thursday 14 March 2019

By Halo Financial Team

British MPs have voted against a no-deal Brexit – but it might still happen.

Although MPs ruled out a no-deal Brexit, a Commons motion does not override statute law and further steps would be needed to see it through, Speaker John Bercow confirmed.

Prime Minister Theresa May told the House of Commons, that the legal default in EU law remains that the UK will leave without a deal unless something else is agreed. The responsibility is on everyone in the House is now to work out what that is.

The European Union Commission says, “There are only two ways to leave the EU: with or without a deal. The EU is prepared for both. To take no-dal off the table, it is not enough to vote against no-deal – you have to agree to a deal. We have agreed a deal with the Prime Minister and the EU is ready to sign it.”

MPs vote on Thursday 14th March on whether to seek an extension to Article 50 until 30 June or beyond.
 
If MPs cannot approve a Brexit deal by Wednesday 20th March, Mrs May would have to seek a longer delay to Article 50, which would require the UK taking part in European elections in May 2019.
 
Following the result, the Pound immediately rose against major pairings in typical mid-market rates. It increased from 1.324 to over 1.33 against the US Dollar on hopes of a Brexit delay. It also hit a 22-month high of 1.178 against the Euro.
 
David Johnson, Halo Financial’s Founding Director, says, “The Pound hit a two-week high against the US Dollar and had its biggest one-day rise so far in 2019. However, it still has some way to go to reach the heights it was at before the EU Referendum Brexit result. In June 2016 the Pound was at around 1.47 against the US Dollar. The rise against the Euro illustrates the appetite for Sterling at the moment.”

In the second of three major Brexit votes in the Commons in as many days, MPs voted against leaving the European Union on 29 March without a withdrawal agreement by 321 to 278 - a majority of 43.

The government had instructed its MPs to vote against its own motion, causing an immediate resignation by Works and Pensions Minister, Sarah Newton. Five Cabinet ministers ignored the whip and abstained.

The result paves the way for a further series of votes tomorrow (Thursday) over the option of extending Article 50, if British MPs and Europe agrees.

On Tuesday, the Commons voted down Theresa May’s Brexit deal. Business leaders urged MPs to urgently find solutions.

Carolyn Fairbairn, CBI Director-General, echoed the view of many UK businesses by saying, “A new approach is needed by all parties. Jobs and livelihoods depend on it.

“Extending Article 50 to close the door on a March no-deal is now urgent. It should be as short as realistically possible and backed by a clear plan.”
 
Big Ben Clock Tower and Parliament house at city of westminster - Halo Financial
 
The drama began on Wednesday after an initial government measure ruling out no-deal until 29 March, was superseded by an amendment from Conservative, Dame Caroline Spelman. This advocated a no-deal Brexit under any scenario – and was passed by just four votes - 312 to 308.

In a sign of things to come, after the vote, the Pound rose 1.5% against the U.S. Dollar.

However, the vote was advisory, rather than binding, so the government subsequently held its own main motion.

Dame Caroline originally put forward her amendment, but decided not to proceed this time, since Conservative MPs were not allowed a free vote on and she feared ministers who supported it would be forced to resign. In the end, co-signatory, Labour MP, Yvette Cooper put the amendment to the vote, which she said was simpler and clearer than the government motion.

In a separate measure, MPs rejected the so-called Malthouse compromise by 374 votes to 164 - a majority of 210. This proposed the UK would not leave the European Union until 22 May 2019 – three months later than the current leaving date.

In addition, the prime minister would have been asked to renegotiate the backstop element of her Brexit deal and replace it with a free trade agreement with technology, to be confirmed, to avoid customs checks on the Irish border. The transition period would also have been extended for another year until December 2021 to allow more time to agree a new trading relationship.

Stay in touch with Halo Financial for the latest Brexit news and how it affects exchange rates.
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