May Prepares Brexit Strategy as U.K. Awaits Supreme Court Ruling

  • Court decides Tuesday whether lawmakers must approve Brexit
  • Government will seek to avoid amendments that tie its hands

Credit Suisse's Parker: Market Is Far Too Short Sterling

Defeat at the U.K. Supreme Court today would see Prime Minister Theresa May trying to rush a short bill through Parliament to trigger Brexit, a strategy that’s looking increasingly hard to pull off as pro-European lawmakers prepare to fight.

The court’s 11 judges are due to give their verdict on a government appeal against a High Court decision that May should seek the approval of lawmakers before formally starting Britain’s withdrawal from the European Union. The ruling will be announced at 9:30 a.m. on Tuesday in London.

A win for the prime minister would let her trigger Brexit unilaterally by invoking Article 50 of the EU’s Lisbon Treaty. Defeat, though, would risk delaying her timetable should legislators slow down the passage of any motion or bill by attaching amendments; such changes might also tie her hands when it comes to the nature of the divorce.

A majority of lawmakers in the House of Commons supported the “Remain” campaign in the June 23 referendum and many members of the unelected upper chamber, the Lords, have expressed concern about the result. The main opposition Labour Party will push for a “meaningful” vote on negotiations and wants to be able to block a deal that’s not in the country’s interests, a person familiar with their plans said late Monday.

“The difficulty will be getting a bill through Parliament without it being amended,” Alan Renwick, deputy director of the Constitution Unit at University College London, said in an interview. “In the Commons, it’s clearly the case that there are quite a few Conservatives who would like there to be more conditions on Brexit, and it’s a matter really of whether they are able to coalesce around any amendments. There’s a larger majority that are unhappy with the direction things are going in the House of Lords.”

May has been seeking to avoid a parliamentary vote on triggering Brexit because of the risk of lawmakers bogging down her plans. Her administration has signaled it’s prepared a tightly worded bill designed to give as little opportunity for amendment as possible for the eventuality of the court ruling against it.

For an explainer on how the parliament vote might work, click here

Single Market

The likelihood of amendments has risen since May last week gave a speech outlining her strategy for the pullout, including withdrawal from the EU’s single market and from full membership of the bloc’s customs union -- essentially a so-called hard Brexit. In the Commons, it will be up to Speaker John Bercow to decide which amendments, and how many, to accept for debate.

The small opposition Liberal Democrats have said they will oppose triggering Article 50 unless there’s a pledge to hold a second referendum on the eventual results of the Brexit talks. The biggest opposition party, Labour, has said it’ll seek to improve any Brexit legislation, but party leader Jeremy Corbyn has promised not to stop Article 50 being triggered.

“We will not block Article 50 but we will seek to amend the bill,” Corbyn told Sky News television on Sunday. “We are consulting on amendments to the bill which will include issues on rights, on protections and on market access.”

Labour amendments will include one to ensure lawmakers can vote down a deal and force May back to the negotiating table, according to a person familiar with the strategy who asked not to be identified. Parliament should be involved throughout the process and not just used as a “rubber stamp” at the end of two years of talks, the person said.

Complicating the issue is the fact that the High Court didn’t specify what form parliamentary approval should take: whether via a simple motion or through a bill which would have to go through at least five stages in each house. The Supreme Court may give more clarity.

‘Uncharted Waters’

Then there’s also the chance that the court may rule the semi-autonomous legislatures in Scotland, Wales, and Northern Ireland must also have a say, according to Catherine Barnard, professor of EU law at the University of Cambridge.

“We’re in such uncertain territory here: it’s really absolutely uncharted waters,” Barnard said in an interview. “This is not a simple matter, particularly where the devolved administrations are concerned. What each of those devolved administrations is saying is there needs to be a legislative consent motion from their respective administrations.”

Scottish First Minister Nicola Sturgeon said in Monday’s Daily Record newspaper that “no matter what the court decides,” she intends to “make sure the Scottish Parliament has the chance to vote on the question of triggering Article 50.”

Ulster Elections

Any requirement that a vote is needed in Northern Ireland is complicated by the fact that the assembly there has been dissolved and won’t reconvene until after elections on March 2.

Deutsche Bank AG strategist Oliver Harvey sees a 50 percent chance the government loses the appeal but wins the parliamentary vote. There is a 30 percent chance the court says the semi-autonomous administrations or the European Court of Justice must be consulted and a 20 percent chance the government loses the parliamentary vote, he said.

Nomura International Plc’s Jordan Rochester sees a further possibility of a delay if the court rules that Parliament must first pass the government’s planned Great Repeal Bill, enshrining existing EU legislation in British law. “This would be a complex task and take several months on its own,” he said in a note to investors.

‘Swift Passage’

The Commons voted last month in favor of a motion supporting May’s deadline for the trigger, while also requiring her to allow more scrutiny of her plans. For former Education Secretary Nicky Morgan, a member of the premier’s Conservative Party who backed “Remain” in the referendum and has pushed for a softer Brexit, it’s unlikely May will lose a vote in Parliament.

“People have had their say; 17 million people gave us a verdict last year, and we should give the bill swift passage through the House of Commons and House of Lords,” Morgan said in a phone interview. “It’s not good news for democracy if Parliament is seen to be blocking the triggering of Article 50.”

Morgan said she expects lawmakers to lay down “probing amendments,” not in the expectation that they’ll be approved, but rather to highlight issues they or their party feels strongly about. For the Liberal Democrats, it may be to mention a second referendum; Sturgeon’s Scottish National Party may want to refer to its ambition for independence, and Labour may seek to protect workers’ rights, she said.

— With assistance by Simon Kennedy, and Thomas Penny

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE