An update on Brexit as German GDP growth wanes

It’s coming down to the wire for British Prime Minister Theresa May now. Starting at about 1900 GMT, parliament is to vote on the Leave Agreement she secured from Brussels. Theresa May has been making last ditch attempts to win over MPs in her own party, with Brussels producing a 1600-word letter promising the Irish backstop would be temporary and “not a threat or a trap.”

Nigel Dodds, leader of the DUP upon whose support the May minority government depends said about the assurances from Donald Tusk and Jean-Claude Juncker:

“Rather than reassure us, the Tusk and Juncker letter bolsters our concerns by confirming everything the attorney-general said in his legal advice regarding the backstop still stands, there has been no change to the withdrawal agreement, and Northern Ireland would be subject to EU laws with no representation in Brussels.”

And within May’s own party, Tory Whip Gareth Johnson resigned his position as whip rather than support the deal and try to whip up votes in parliament. Johnson said the deal would leave the UK “perpetually constrained by the European Union”.

And so, almost no one gives Theresa May any chance of securing passage of her agreement with the EU. Thus, the speculation now goes to what happens after she loses the vote.

The Very British Coup?

A Very British Coup is a 1982 novel by British politician Chris Mullin about an unpopular British Prime Minister who many in the media, in financial services, and the intelligence services are unhappy with. And so, they try and overthrow him, uniting to stop his policies by any means necessary. Think of it as the British equivalent of the ‘Deep State’ attacks, of which Donald Trump has accused the ‘establishment’ in the US.

People are drawing parallels between Theresa May and the book’s PM Harry Perkins. Here’s the Sunday Times:

Theresa May has been warned that her government “will lose its ability to govern” after Downing Street uncovered a bombshell plot by senior MPs to seize control of Brexit negotiations and sideline the prime minister.

A cross-party group of senior backbenchers — including former Tory ministers — plan what one senior figure branded a “very British coup” if May loses the crunch vote on her Brexit deal on Tuesday.

At least two groups of rebel MPs are plotting to change Commons rules so motions proposed by backbenchers take precedence over government business, upending the centuries-old relationship between executive and legislature.

Downing Street believes that would enable MPs to suspend article 50, putting Brexit on hold, and could even lead to the referendum result being overturned — a move that would plunge the country into a constitutional crisis.

May’s team got wind of the plot on Thursday evening when one of the conspirators — a former cabinet minister — was overheard by the government chief whip Julian Smith discussing the plan in the MPs’ cloakroom. He commissioned written advice from legal experts, who warned May her government’s future was at stake.

Smith briefed May on Friday on the explosive document, which says: “Such an attempt represents a clear and present danger to all government business.

“Without control of the order paper, the government has no control over the House of Commons and the parliamentary business and legislation necessary to progress government policies. The government would lose its ability to govern.”

Is this really a coup or just MPs trying to take back control of the process?

Article 50 suspension or revocation?

The real problem is in the middle of that quote:

Downing Street believes that would enable MPs to suspend article 50, putting Brexit on hold, and could even lead to the referendum result being overturned — a move that would plunge the country into a constitutional crisis.

Conservative party figures like former PM John Major are calling outright for a revocation of Article 50. His view:

The cost of a no-deal Brexit to our national wellbeing would be heavy and long-lasting. The benefits are close to zero. Every single household — rich or poor — would be worse off for many years to come. Jumping off a cliff has never had a happy ending.

And he says that the Brexit vote was a vote to leave the EU by only 37% of the eligible electorate, which he says “hardly constitutes the overwhelming “will of the people””.

So revoke Article 50, he says. That’s what the May government is trying to avoid, which is why she has warned that parliament’s blocking Brexit is more likely than ‘no deal’.

A second referendum?

And, of course, this leads directly to a second referendum, as the Daily Telegraph points out:

Pro-EU MPs will raise the stakes on Monday in the battle over Brexit by publishing draft legislation to force a second referendum that could reverse the result of the 2016 vote.

A cross-party group of MPs, including Dominic Grieve, the former Conservative attorney general, wants Theresa May to give Parliament a greater say in deciding how Britain leaves the European Union.

It comes after reports emerged at the weekend of a planned “coup” by unnamed senior MPs to grab control of the parliamentary timetable by allowing backbenchers’ legislation to take precedence over the Government’s.

MPs are to vote on Mrs May’s deal on Tuesday night, with No 10 braced for a defeat by an unprecedented majority of more than 200.

The cross-party draft legislation published on Monday by Mr Grieve, the Liberal Democrat leader Sir Vince Cable and Lord Lisvane, the former clerk of the House of Commons, proposes another referendum in which voters would be given a choice between Mrs May’s deal or staying in the EU.

The draft law could in theory be tabled as early as Monday next week, if Mrs May loses on Tuesday and she has to come back to the Commons with a new plan for delivering Brexit. It will require John Bercow, the Speaker, to suspend centuries-old rules and make it easier for MPs to table laws that can be passed.

So that’s the speculation. The coup plotters are accused of wanting the following sequence of events to transpire:

  1. Vote down Theresa May’s deal
  2. Table a proposal to change Commons rules so motions proposed by backbenchers can take precedence over government business
  3. Force a vote that makes a no-deal Brexit impossible
  4. Delay Article 50 or revoke it outright
  5. And then – and this is the key – hold a second referendum, with the explicit intent of overturning the first one.

I think this is exactly what Remainers want to see happen.

A hard Brexit

The probability that we end up there increases because even MPs who are not pro-Remain think a hard Brexit is going to be disruptive. And many of them want to avoid that disruption. So they would back steps 1, 2 and 3, making it easier to get steps 4 and 5 on the table.

But let me make a digression to Germany here because they released economic figures this morning.

Germany’s economy witnessed lackluster growth in 2018, according to flash data released Tuesday, in line with expectations.

German gross domestic product (GDP) grew 1.5 percent in 2018, compared with 2.2 percent in 2017, the latest data from the Federal Statistics Office (Destatis) showed. The figures point to the weakest rate of growth in five years.

Destatis noted that the German economy had grown for the ninth year in a row, “although growth has lost momentum.”

Eric Schweitzer, head of the German Chambers of Commerce and Industry (DIHK), has previously warned that “Brexit threatens massive consequences for the German economy”.

He says:

“We must be clear what this is all about. More than 750,000 jobs in Germany depend on exports to Great Britain. Just-in-time production and supply chains are at risk”.

And, in the context of sputtering German growth, this is significant. Germany has more to worry about with Brexit than any nation except the UK itself and maybe Ireland. And this is especially true given Germany’s over-reliance on exports for growth.

I suspect that Brussels now understands that Brexit will be a disaster for the EU economy. And so, having made an object lesson out of Britain that would prevent other member states from wanting to leave the EU, they may want to avoid a no-deal Brexit too.

The EU may just well become the allies of pro-Remain MPs once Theresa May’s deal is blocked.

My view

I continue to see a delay or revocation of Article 50 as a base case. A no-deal Brexit carries a lot of risk. And there are enough enemies of the no-deal scenario in both the Conservative and Labour parties to make it a non-viable outcome.

Will this put the UK into a constitutional crisis. It could do. But, at a minimum, for Labour, despite Corbyn’s pro-Leave sympathies, he needs to go ahead and do the no-confidence vote if he knows what’s good for himself. May is a poor campaigner with a muddled message on Brexit. I think the Tories would dread going into a general election with her at the helm. Despite polls showing them ahead, they just might lose a snap election, making Jeremy Corbyn Prime Minister.

And given his more socialist anti-neoliberal agenda, that’s when a ‘very British coup’ scenario would really come into being.

We are only at the beginning of more turbulent years for western Democracies.

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