Rebel Lawmakers Launch Bid to Stop No-deal Brexit

EghtesadOnline: British Prime Minister Boris Johnson warned members of his own party that if they did not vote with the government when the country’s parliament returns on Tuesday from a summer break, they would undermine the UK’s position in talks with the EU, as his administration rushes to refashion a new Brexit deal before October 31.

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04 September 2019

Johnson has insisted there were “no circumstances” in which he would ask his European counterparts for a further delay to the already twice postponed Brexit deadline, and he has also hinted that legislators’ opposition could force him to request a new national election, CNBC reported.

The pound weakened significantly against both the dollar and the euro on Monday, after parliamentarians on either side of the country’s Brexit divide talked up the possibility of a confrontation that could trigger further uncertainty.

At around 8:00 a.m. on Tuesday, sterling was trading as low as $1.1968, its lowest since a “flash crash” in October 2016. The brief crash saw the pound fall 6% in a matter of minutes during Asian trading hours to $1.1491, confounding market participants, according to Financial Tribune.

While no single factor caused the sudden nosedive in late 2016, an official report from the Bank for International Settlements concluded that it was caused by a combination of headline-sensitive algorithmic trading, inexperienced traders and a lack of active market participants given the time of day.

Opposition lawmakers and some members of Johnson’s Conservative Party have spent recent weeks in discussions on how best to prevent a disorderly Brexit, in which the UK would separate from the world’s largest trading bloc without a detailed legal and commercial agreement.

With his statement from outside 10 Downing Street on Monday night, the British leader sought to strong-arm lawmakers who might seek to limit his room for maneuver with Brussels, after it became clear over the course of the past weekend that Labour leader Jeremy Corbyn and his allies would seek to rapidly introduce legislation on Tuesday to block an economically damaging hard Brexit in late October.

This legislation, a draft of which was released Monday night on Twitter by an opposition lawmaker Hilary Benn, is designed to give parliament the final say over the government’s behavior and could push Brexit’s current deadline back till the end of January 2020.

It forms part of an effort designed to counteract Johnson’s earlier decision to suspend the legislature’s activities for an exceptionally long period of time in the lead up to the October 31 exit date.

Johnson has sent representatives to restart discussions with the EU over the Irish backstop, an insurance policy to protect the border between the UK and Europe on the island of Ireland that proved the thorniest of issues in the agreement that was previously negotiated during Theresa May’s premiership.

And the prime minister insisted Monday that efforts to rule out a no deal, an implicit threat that he says will force the EU to soften its own stance on the issue, could “chop the legs out” from under the UK’s negotiating position.

He vowed that parliament would still have an opportunity to examine any changes to an agreement that might be finalized at a summit of EU leaders in the second half of next month, and warned that an election would only complicate the problem.

Snap Election

“I don’t want an election, and you don’t want an election,” he said in an appeal to a national television audience, part of an electorate that since 2014 has endured two elections, twin referendums and consecutive Conservative prime ministers resign on the issue of Europe.

But several political analysts and observers said Downing Street might actually welcome the chance to campaign on their Brexit position.

“Johnson and his allies seem to believe that they could frame a snap election as a choice between the ‘people’ and an anti-democratic political class,” said Kallum Pickering, a senior economist at Berenberg, in a research note to clients. The probability of a Corbyn-led government, he insisted, “remains low.”

Johnson would nevertheless require some opposition lawmakers to support the idea of an election, since two thirds of the lower chamber, the House of Commons, must vote in favor of holding another national vote. And some senior Labour politicians have said the damage from a disorderly exit must be avoided at any cost, even if it meant their party appearing to be unwilling to face voters in the near term.

Goldman Sachs Predicts

Goldman Sachs has raised its estimate for the likelihood Britain will crash out of the European Union without a deal to 25% from 20% citing the prolonged suspension of parliament, as lawmakers decide the fate of the government’s Brexit plans.

Goldman said its base case with a 45% probability remained that a close variant of the existing Brexit deal which was rejected three times will pass in the House of Commons.

The bank cut the probability of no Brexit to 30% from 35%. UK lawmakers will decide on Tuesday whether to shunt Britain towards a snap election when they vote on the first stage of their plan to block Johnson from pursuing a no-deal Brexit.