Brexit: deal or no-deal?

Insights Insights

State of play

After taking office as Prime Minister (PM) on July 24th, 2019, Boris Johnson has made it clear that leaving the European Union (EU) on October 31st, with or without a deal, was his central focus. The UK Parliament has yet upset Johnson’s applecart by forming a parliamentary majority opposed to a no-deal during the only time window the UK government allowed for Parliament to meet, September 3rd to 9th. Parliament passed two bills to prevent a no-deal.

The PM tried to counter-attack with a motion calling for holding snap elections before the EU Summit of heads of states or governments of October 17th – 18th but failed. Even if the motion for snap elections had been adopted, it is unlikely that they would have provided a stable majority to a PM.

Why the PM provoked a battle with Parliament: the “secret deal” scenario

Rumors are circulating that the EU and the UK government mutually reassured themselves that they would conclude a last-minute deal before October 31st, during the G7 Summit in Biarritz. The existence of a secret deal would explain the muted reaction of the EU and national governments after Boris Johnson’s unorthodox decision to extend parliamentary recess.

The terms of the secret deal would essentially focus on the “Irish backstop”. In short, the UK government would agree to keep unchanged the withdrawal agreement negotiated by former PM Theresa May, except for the “Irish backstop” provision that would be formally removed. In return, a safeguard clause would be introduced, providing that if no acceptable “alternative arrangement” would be found in order to keep an open Irish border before the end of the transition period, Northern Ireland would remain within the Customs Union until the conclusion of a new deal.

This compromise solution would bring significant benefits to both parties. On the one hand, Boris Johnson could claim to have delivered Brexit on time and succeeded to reopen the withdrawal agreement. On the other hand, the EU would see the substance of the withdrawal agreement preserved and be able to maintain the UK within its own sphere of influence.

The conclusion of such an agreement would open a two-year transition period that would safeguard economic players and citizens and give the opportunity to define the future EU-UK relationship.

What the EU side is saying

Until the scenario of a “secret deal” is confirmed (or not), the EU prepares for a no-deal. The European Commission issued a communication on the process of preparing for a no-deal Brexit on September 4th.

If the UK requests a further extension, the latter would not be provided automatically. The postponement would have to be requested for a “credible purpose" and approved unanimously by the 27 EU Member States.