Theresa May has warned that Britain will enter “uncharted territory” if, as expected, MPs reject her Brexit deal on Tuesday. But already the contours of this bleak new terrain have been coming into view in the first two weeks of 2019.
As MPs prepare for the vote on the terms of Britain’s exit from the EU — seen by some as the biggest decision facing parliament since the early days of the second world war — the British political system is paralysed. And the country remains angry and deeply divided.
Police have been called in to protect MPs from protesters camped outside parliament. “We are preparing for all scenarios, and deal or no-deal the police will be here,” Metropolitan Police chief Cressida Dick said in December. “We will do our level best to keep everybody safe.” Inside parliament, the atmosphere is no less febrile. Last week it resembled a bear pit as the House of Commons Speaker, John Bercow, was accused of ripping up the parliamentary rule book to help opponents of Brexit.
Meanwhile, near Dover, Britain’s main entry point for fresh food, medicines and other goods, ministers ordered a trial to see what would happen if — as some government forecasts suggest — customs and regulatory checks in a no-deal Brexit cause a collapse in trade at the port. About 80 lorries took part in a mock traffic jam, somewhat fewer than the 10,000 trucks the Kent port handles on busy days.
Scenario: The May deal
The prime minister’s Brexit deal would take Britain out of the EU on March 29. However, it could keep the UK in the so-called Irish backstop arrangement — providing for a “temporary” UK/EU customs union — indefinitely, a proposal that is judged by critics to be a form of “vassalage”. Mrs May’s plan seems certain to be heavily defeated by MPs on Tuesday opening the way for alternatives.
An unpublished government report insists Britons will have “enough calories” to survive such disruption, but some fresh foods would quickly run out. A freight company hired by the government to bring in emergency supplies turned out to have no ferries. And health secretary Matt Hancock has boasted that he is now the biggest single purchaser of fridges in the world, in order to store medicines, while business secretary Greg Clark has warned of the “mounting alarm” at what is seen in global boardrooms as the UK’s collective outbreak of madness.
Mrs May insists that the only way to avoid tumbling out of the EU without an agreement — unless the law is changed, Britain will leave by default on March 29 whatever happens — is for MPs to support her deal, a compromise plan hammered out with Brussels over almost two years.
Mrs May’s aides say they are borrowing from the “winning ugly” strategies of American football teams, which slowly work their way downfield with a running game that methodically grinds down the opposition’s defensive line play after play, rather than the style of more TV-friendly flair teams that make dramatic progress through long, spectacular forward passes.
“The second option isn’t available to us,” admits one May aide.
That attritional push will, over the coming weeks, face two remorseless and linked facts: Brexit day is less than 80 days away and while Mrs May tries to sell the deal at Westminster, in the real world companies and individuals are preparing for a disorderly and potentially chaotic no-deal exit.
“The problem is that everybody has an interest in taking this to the wire,” says one pro-Brexit minister. “The PM thinks the closer we get to March 29, the more likely it is that people will step back from the cliff-edge and back her deal. The Remainers think that if there’s a stand-off, in the end we’ll have to delay Brexit and have a second referendum. And the Brexiters think if they can just keep going, we’ll eventually leave without a deal because that’s the default setting.”
The next phase in this game of chicken will be played out in parliament on Tuesday. Mrs May’s deal sets out the terms of an orderly withdrawal, including a £39bn exit bill, protection of citizens’ rights, a standstill transition period lasting until at least December 2020, and a contentious guarantee against a hard border in Ireland. It also gives a vague outline of future relations between the EU and UK, with details to be filled in later.
The problem is that even the prime minister expects to lose the vote; Tory Eurosceptics believe it is a messy compromise that would not represent a clean break from the EU; her allies in Northern Ireland’s Democratic Unionist party— whose 10 MPs have kept Mrs May’s minority government in power — believe the plan for the Irish border would impose new barriers between the region and the rest of Britain; opposition parties seem determined to vote it down. Mrs May has already delayed the vote to avoid a damaging pre-Christmas defeat.
Scenario: No deal
A majority of MPs made clear last week that they are against Britain leaving the EU without a pact. However, Britain could still tumble out of the EU without an agreement if Mrs May’s proposal collapses and the House of Commons then fails to decide on a clear alternative before March 29.
“You’re not going to have the complete collapse in Brexiter sentiment which Number 10 seems to be envisaging,” says David Jones, a former Brexit minister. A cabinet minister concurs: “I don’t think the vote will go through.” Downing Street now openly discusses how Mrs May expects to proceed if, or when, she loses on Tuesday.
The plan is straightforward: she will plough on. Mrs May hopes to peel off some rebels by Tuesday and limit the scale of her defeat. A loss by 50-80 MPs might look like something of a let-off, given that some senior Tories predict the margin of defeat could be 200 or more. Then she will go back to Brussels, seek some new assurances that the Irish backstop — which provides for a “temporary” UK/EU customs union — will be temporary and try again.
Various amendments, offering MPs more control over the backstop and giving opposition Labour MPs promises that post-Brexit Britain will not undercut EU labour and environmental laws, will be waved through to try to assemble what party whips call a cross-party coalition “in the national interest”.
Foreign secretary Jeremy Hunt warned last Friday that the Commons faced “paralysis” over Brexit. But supporters of the May plan believe that in the end at least 30 hardline Tory Eurosceptics will reject her deal and that she will need Labour support to get it through. But if her own proposal is defeated, the prime minister will be obliged to put forward “Plan B” within days— limiting her room for
Perhaps the biggest problem for Mrs May’s strategy of trying to frighten MPs into supporting her deal is that all of her critics seem to think if they can just get a bit closer to the March 29 deadline, their own perfect Brexit outcome — whether it is a no-deal exit or a second referendum — will materialise. That is despite there being no evidence to suggest majority parliamentary support for any particular Brexit, least of all an unplanned one.
Although Brexiters insist a no-deal exit is nothing to be feared, environment secretary Michael Gove — a leader of the Leave campaign in 2016 — warned last week that it would hit smaller farmers and food businesses, with tariffs of up to 40 per cent on beef exports. Mr Clark has said it would mean Britain trading with the EU on the “most rudimentary terms” of world trade. Food queues at supermarkets would be indelibly linked to this Tory government in the public memory.
In cabinet last week Mr Gove said those hoping for the “perfect Brexit” were like “ swingers in their mid-fifties” hoping that Scarlett Johannson might turn up at the party. So far there is no sign that the rival camps in Westminster have given up hope that the Hollywood star might be a late arrival.
Scenario: A new vote — of some kind
The chances of a second Brexit referendum — in which voters are offered a chance to stay in the EU — have grown in recent weeks. But there is still no clear majority in the House of Commons for another plebiscite and much depends on whether Labour leader Jeremy Corbyn finally decides to back the move, which is overwhelmingly popular with the opposition party’s supporters.
Mrs May says the government is not pursuing a no deal Brexit and a large majority of MPs and some cabinet ministers have indicated they will mobilise to stop it happening. Yet it remains the legal default setting and Mrs May has not ruled it out. “When you’re playing chicken, make sure the other side has an incentive to back down,” says Tom Tugendhat MP, chair of the House of Commons foreign affairs committee.
Mr Tugendhat worked as a Bloomberg energy correspondent in 2000 when protests about high fuel prices in Britain led to a blockade of refineries and panic buying. He fears the same could happen again if a no-deal Brexit looks imminent. “Life is a confidence trick,” he says. “This is not a logistics exercise, it’s an exercise in psychology.”
So what will Britain look like in coming weeks if the parliamentary deadlock persists? Mrs May now chairs a weekly Brexit contingency planning cabinet meeting and it would be surprising if the public and business are not escalating the process of making their own plans. Mrs May has also insisted, although few believe her, that she will not consider a delay to Brexit by asking for an extension of the Article 50 exit process.
“One of the risks in the weeks ahead is that public anxiety over no deal becomes acute well before we reach March 29,” says Tim Sarson, a partner at KPMG. “The impact of no deal on economic and personal behaviour could become apparent sooner than people think.”
Until now, much of the preparation for a no-deal exit by British business has been done by large corporations, especially in the pharmaceutical, automotive and food sectors. But if Mrs May loses the vote, other, smaller, companies are expected to shift their no-deal planning into top gear.
“We are seeing a lot of companies and organisations panicking at the last minute,” says Mr Sarson. He has noted a surge in stockpiling in recent days in the construction sector. Pharmacies and utilities, he says, are also hoarding their own medical supplies, despite government advice not to do so. “Nobody wants to be left high and dry.”
James Hookham, deputy director of the Freight Transport Association, says: “If the prime minister’s deal is rejected, a lot of companies will start pressing the big buttons and full-scale contingencies for no deal will begin. Companies will sign off on employing staff and executing contracts. They will commit money that they know they will not get back, no matter what happens on Brexit.”
Financial services companies have moved assets worth almost £800bn including staff, operations and customer funds to mainland Europe since the 2016 vote, according to the consultancy EY. Many analysts believe the alarm will only grow if there is no Brexit pact agreed by March, a view shared privately inside the UK Treasury.
“If, as we approach March 29, we still can’t see an off-ramp on to a soft landing, the market reaction will be significant,” says Tina Fordham, managing director and chief global political analyst at Citi Research. “Markets are still assuming that politicians are responsible adults who won’t crash the country in the end. But a no-deal outcome has not been priced in.”
Neither has the reaction of the public. One of the greatest concerns is the supply of medical goods. Leading figures in the pharmaceutical industry say huge efforts are being made to ensure patients receive drugs sourced in Europe. “The UK is going overnight from an efficient market in pharmaceuticals to a planned economy,” says one leading figure in the industry. “Despite all our efforts, gaps will appear and there is likely to be significant disruption to patients.”
Pinder Sahota, general manager of Novo Nordisk UK, told MPs last November that his company, which supplies half the UK’s insulin for diabetics, has doubled its stocks. Food supply is another area where the risks of no deal could quickly spiral.
The public might be reassured by the government that there is no need to panic, although it is perhaps just as well that they have been shielded from cabinet discussions in which Mr Gove and Mr Hancock have argued about whether food or medicines should be given priority on emergency ferry services in a no-deal scenario.
Tory Brexiters, who hold the fate of Mrs May’s deal in their hands, are sanguine, believing the EU will eventually offer more concessions on the Brexit deal if it looks like they could lose the £39bn divorce settlement agreed under the withdrawal treaty. “The clock is our friend, we should be playing hardball now,” says Mr Jones, the former Brexit minister, adding that a “managed no-deal” remains the best option for the UK.
A brighter future on the other side may tantalise Brexiters, but for many in business and those running the country’s public services, the continuing brinkmanship is starting to look reckless in the extreme. Mr Clark, the business secretary, sums up the prevailing mood in the corporate world towards a no-deal exit: “It would be a disaster.”