What can businesses legitimately hope for now out of the Brexit process as the UK debate heats up? Optimistic investment bankers feel that the events of the last few days make a no-deal exit less likely – JP Morgan puts the chances of this at just 10 per cent. Yet this seems low, and it would be unwise to write off a no-deal exit and all its costs in business planning. After all, if nothing can be agreed before March between the two sides then a no-deal exit is still the default option .
Two things have settled nerves a bit in recent days. One was an opinion issued by a senior legal adviser to the European Court of Justice saying the UK could revoke article 50 unilaterally – appearing to give some encouragement to those calling for a second referendum. The opinion still has to be ratified by the court itself .
Perhaps more significantly, a key amendment passed in the House or Commons as part of the debate on the withdrawal agreement gives the UK parliament the power to suggest an alternative route if the agreement is voted down. This could put other options back on the table, and is being promoted in part by those arguing that the UK should remain in the EU single market, like Norway .
However, huge problems still lie ahead. The vote looks likely to be lost by Theresa May, perhaps heavily. A period of political instability could follow. It remains unclear whether a majority could be found in the House of Commons for an alternative route.
And then there remains the key issue of agreeing any new approach with the EU – already well fed up with Brexit . For example, were the UK to opt for single market membership it would have to sign up for free movement – seen as its reddest of red lines.
The bottom line for business is that this uncertainty looks likely to run into next year. If the vote goes down, nothing will be sorted at an EU summit later next week. At best, a period of regrouping will follow, perhaps before a second vote in January. At worst the UK will descend further into political chaos. Best then for businesses to remain cautious and take the daily swings in moods with a pinch of salt. This one has a bit to run yet.
