Brexit – The Road to Nowhere

As we’ve been writing the past year, with no possibility of a Brexit deal being made, we saw only extension followed by a second referendum as the likely outcome. We feel the events of the past 10 days have made this more obvious, though still surprisingly not consensus. 

So now we move onto what we expect once this does become consensus – vote, vote vote..

Time is running out fast.

When we last wrote, there were 42 days left. Hardly a long period but still enough time for the politicians to “amend and pretend” that they were busy working on “the will of the people.”

In reality, a lot happened over those 10 days, and none of it has persuaded us to change our probabilities for the outcome;

  • 90% Extension followed by (conditional on) second referendum 
  • 10% no deal crash out (NDC)

Reality sets in

So, if so much happened, and yet the probabilities didn’t changed – what happened?

Well the political fragmentation we expected to happen has begun. The end of the two-party system that has governed the UK has begun its long slide into history. 

With both major parties seeing small but significant breakaways to join the new The Independent Group (TIG), the political risks of a badly managed Brexit suddenly became reality.

The wonderful (fantasy) world of Tiggers 

We’ve seen this before – in 1981 “the Gang of Four” broke away from Labour, ostensibly because of the party’s anti-EU stance among other things, and formed the SDP.

It’s ironic that the SDP actually still exist, though in the alternative form, actually anti-EU, with their only (Euro) MP deserted from the UK Independence party (UKIP).

So far the TIG’rs don’t matter, and are a million miles away from a manifesto of policies that address even pre-Brexit Britain’s problems, let alone what post-Brexit will require. 

But the stand off has been broken, and now we should see the only logical path being taken – first extension, then a second referendum.

For that, the TIG’rs are clearly to “blame”

May we please move on?

Having tried every obfuscation known to politics, PM May has been left with having to move inexorably towards removing the risk of no deal Brexit on March 29th, as we have predicted throughout. 

While not quite there, her “May deal or no deal” treat has been eroded by the actions of Parliament, and even if the latest “parachute bill” – the Cooper / Letwin amendment which should see a vote this week – is ditched, it can only be a sign that Parliament has saved itself from the immediate threat of “no deal” and doesn’t need the bill. Job done.

That said, the moment the no deal outcome looks at all likely, expect Parliament to dust off a fresh amendment with Cooper’s name at the front.

From amend and pretend, to extend and upend.

Having insisted an extension was impossible, even as it became clear there was insufficient time even to debate all the necessary legal issues in Parliament, PM May is caving on the extension, just as we predicted she would. 

Now the question is how long an extension, and what the impact will be on her own party. Will even a 2-3 month “dot-the-i’s” delay cause the extreme wing of her party to “leave”?  

With the EU leaking they are suggesting 21months delay, there is a real risk this upends both parties.

EU decide 

No we think the extension will be set by the EU. After all, only full revocation of AR50 is an option for the UK, and all other changes to terms, especially an extension of negotiations, requires ALL 27 members to agree and vote. 

There is “conveniently” an EU meeting just ahead of the March 29th deadline, providing a platform for such a vote.

But with the UK busy insulting each of the 27, one at a time, it’s illogical that this would come at no cost.

We think the cost will be setting a date for second referendum – either to decide to actually follow through with a Brexit, or to have the population agree to the terms of the exit deal, of which Parliament is plainly incapable.

Labour of hate

The biggest excuse for not even countenancing a second referendum has been the lack of any political will amongst MPs. Indeed with both party leaderships having to toe the “people have decided” line and back Brexit, it’s been impossible for those “Leave-but doubt” MPs to even think straight. There are many, yet they have had to remain closeted, for fear of hate attacks. 

Similarly the remainers who have had problems backing their party’s often comedic attempts to move the Brexit ball forward, have felt closeted lest the hate mail begin. 

But that seems to be thawing – Labour, who have been as conflicted as the Tories over Brexit, set in motion at their party conference last autumn, a clear checklist, with a second referendum as the last resort. 

With most of the other options exhausted, Corbyn looks set to cave in and declare a second referendum as desirable, for fear of further fragmentation of his party. 

Here’s a nice summary of the split apparent in the Labour ranks.

Saving Facebook Face.

Of course if this were as easy as hitting “like” on a Facebook page for referendum choices, democracy would be saved easily.

Instead, this outcome is largely about saving face and avoiding the blame of history, will need careful crafting.  But we see this being achieved (if far from “liked” by all) in the following manner.

Regarding the question of whether to stay in the EU, should the UK 

  1. remain in the EU 
  2. leave the EU under the terms set by PM May’s deal
  3. Leave the EU without agreeing terms 

A fourth option may be required but runs the risk of greater confusion.

4. Leave the EU once a suitable set of terms (Deal) can be agreed in Parliament 

As we suggested, this won’t be (Facebook) liked. But it does serve the purpose of allowing the “people” to have a final say, while removing the interminable agony of MPs who collectively are unable to provide the means by which the original Brexit desire can be met. 

 (Not just) Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.

There will rightly be continued skepticism regarding the length and terms of extention granted by the EU, the acceptance by the UK, and of course the adoption of a second referendum by the Labour Party.  

While we remain convinced of the final outcomes, we are in a very small minority. 

The consensus remains firmly for something like the following;

  • No Brexit 20%
  • Extension 30%
  • Disorderly exit 50%

With no probability given for a second referendum, even after the events of this week, we imagine financial markets are having a tough time pricing the outcome at all. 

So we’re saved right ?

Well no – for a start a second referendum can actually create the no deal crash out scenario as a legitimate outcome. In this case, option 3 on our referendum voting pad above, there is nothing Parliament could do to stop it. 

However by then, presumably both sides would have had more time to clarify what a no deal “divorce” would mean and one can imagine trade and movement arrangements being better managed than they are currently. The dustbins will get emptied and the shops will remain stocked.

But the good news is that any outcome could have greater political legitimacy than the current chaos. 

And we’re not little children, And we know what we want

So far the poll of polls implies we’ve simply flipped – from 52-48 Leave to 53-47 remain – the same lack of legitimacy as the original referendum 

IMG_8850

And the future is certain, Give us time to work it out

We’ve suggested elsewhere that the one lasting legacy of this Brexit fiasco is the dissolution of the two party system of politics in the UK.

We remain convinced that this will be the eventual result. The raw reality has long been that both parties are very uncomfortable compromises – people living uneasily under the same roof for largely economic convenience. 

Well both party’s saw defections this week, and not all were simply to a new “no to Brexit at all cost” grouping (TIG). While Brexit is the main issue at hand, it’s actually exposed many genuine divisions along social lines, which may yet be irreparable. 

Thankfully both party’s are devoid of leadership, which means that their “leaders” remain unchallenged. 

In other words, no one is happy with their partner, but nothing more exiting has come along yet.

This is hardly an equilibrium. Indeed, without firm and clear leadership, both party’s run the risk of losing (further) their relevance with the electorate, let alone their own members. 

When we joke that the UK is headed for “67 parties” to replace the two and a bit that we’ve seen over the past hundred years, what we mean is, that politics itself is fragmenting rapidly, and the large groupings like Tory and Labour have just demonstrated their irrelevance to the globalization/tech challenges of the modern World. 

Either way, once Parliament has finished amending and pretending, and a second referendum has taken place, expect a general election to loom large. While possible before the second referendum, a general election would itself become the second referendum, and therefore out of sequence. 

No, instead we see further party dissolution, and fragmentation, culminating in a general election. 

In a words, UK is set to vote, vote vote….

Talking heads 

So to conclude, we’re finally on the only path that’s been tractable – the road to nowhere.

Well we know where we’re going

But we don’t know where we’ve been

And we know what we’re knowing

But we can’t say what we’ve seen

And we’re not little children

And we know what we want

And the future is certain

Give us time to work it out

Songwriters: Chris Frantz / David Byrne / Jerry Harrison / Tina Weymouth

Road to Nowhere lyrics © Warner/Chappell Music, Inc

3 Replies to “Brexit – The Road to Nowhere”

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