UK Lawmakers Rule Out Any No-Deal Brexit (WSJ)
Last Modified: 03:36 PM, Wed Mar 13, 2019

British lawmakers ruled out a no-deal exit from the EU today. After yesterday's defeat, Prime Minister Theresa May said she would put a vote before Parliament over whether to rule out a no-deal exit on March 29, when the U.K. is currently scheduled to leave the EU. That would have postponed but not eliminated the possibility that the U.K. leaves the EU without a deal. But lawmakers seized on an amendment to May's proposal in an effort to rule out altogether the prospect of a no-deal exit, and passed it by 312 votes to 308. While the vote makes a no-deal exit much less likely, technically that outcome can't yet be entirely ruled out. Other EU countries must first agree to delay Britain's departure beyond March 29, and then a deal must be reached and ratified before whatever new deadline is set.

By Stephen Fidler and Jason Douglas

March 13, 2019

WSJ

 

LONDON-British lawmakers unexpectedly ruled out a no-deal exit from the European Union on Wednesday, likely eliminating the prospect of a chaotic U.K. departure from the bloc that many businesses have depicted as a worst-case scenario for the country's economy.

 

The decision overturns Prime Minister Theresa May's Brexit calculus. It came a day after Parliament resoundingly rejected for a second time the deal she negotiated with the EU laying out conditions for the country's orderly separation from its biggest trading partner.

 

After Tuesday's defeat, Mrs. May said she would put a vote before Parliament over whether to rule out a no-deal exit on March 29, when the U.K. is currently scheduled to leave the EU. That would have postponed-but not eliminated-the possibility that the U.K. leaves the EU without a deal.

 

But lawmakers seized on an amendment to Mrs. May's proposal in an effort to rule out altogether the prospect of a no-deal exit, and passed it by 312 votes to 308.

 

That likely sinks Mrs. May's hard-fought deal. She had resisted eliminating the option of a no-deal exit, reasoning that keeping it alive as a possibility would not only encourage lawmakers to vote for her deal, but also encourage the EU to be more flexible in the negotiations.

 

While the vote makes a no-deal exit much less likely, technically that outcome can't yet be entirely ruled out. Other EU countries must first agree to delay Britain's departure beyond March 29, and then a deal must be reached and ratified before whatever new deadline is set.

 

With Wednesday's vote, however, options other than Mrs. May's deal become much more likely. Those include an exit agreement with much closer ties to the EU than Mrs. May has envisioned and a second referendum on Brexit.

 

Lawmakers will now likely vote on Thursday in favor of a further proposal to request a delay in Britain's scheduled exit date beyond March 29. That will require the unanimous approval of the other 27 EU governments.

 

Other member states are likely to agree to an extension during a summit in Brussels that starts on Thursday of next week. However, it isn't clear what length of extension they would prefer and whether conditions would be imposed.

 

The prime minister has backed a short delay, perhaps only until late May, in order to keep the pressure on lawmakers in her own Conservative Party and salvage her divorce deal. That would mean the country could confront a fresh no-deal scenario at the end of the extension.

 

A longer delay now becomes much more likely. That could allow Parliament to force her into negotiating much closer ties to the bloc than the government wants, or even into providing the opportunity for a second referendum.

 

Earlier Wednesday , the government underlined that a no-deal Brexit was still in the cards by unveiling the tariff schedule the U.K. would apply temporarily to all imported goods in case of a sudden break from the EU.

 

In a proposal aimed at easing the pain for consumers, the U.K. trade ministry on Wednesday said it would eliminate tariffs on almost 90% of goods imported into the U.K. by value. But it also proposed tariffs protecting sensitive British industries, including car and ceramics manufacturers and meat producers, after which consumer prices would likely rise.

 

Currently, all goods from the EU enter the U.K. tariff-free, while goods from outside the EU carry a range of tariffs determined by the bloc.

 

The U.K. also said that in a no-deal scenario, it wouldn't impose any checks or duties on goods imported into Northern Ireland, part of the U.K., over the politically sensitive border from the Republic of Ireland, an EU member state.

 

Treasury chief Philip Hammond, a close ally of Mrs. May, highlighted the potential economic benefits of a smooth and orderly exit in a regular budget update to Parliament Wednesday, saying the U.K. would experience a "deal dividend" that would spur growth and boost tax receipts.

 

"Last night's vote leaves a cloud of uncertainty hanging over our economy. And our most urgent task in this House is to lift that uncertainty," he said.

 

Write to Stephen Fidler at stephen.fidler@wsj.com and Jason Douglas at jason.douglas@wsj.com

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