Fra ABN Amro:
Parliament likely to reject May’s deal, but also no-deal – MPs face another week of crucial Brexit votes starting tonight, when PM May puts her tweaked deal to a vote. Given Attorney General Cox’s assessment today that the legal risks around the backstop remain unresolved, the scale of the defeat will likely be similar to when she put her deal to a vote in January (then, the deal was rejected 432 votes to 202).
The focus is therefore already on what comes next. Parliament will vote on two further motions by Thursday – first, on whether to reject a no-deal Brexit, and second, on whether to delay Brexit. We expect a no-deal Brexit to be rejected, and a Brexit delay to be supported.
However, the length of any delay will be crucial. Comments from the Labour front bench (Emily Thornberry) over the weekend suggested support for only a limited extension (up to three months) that would mean the UK not participating in the European Parliament elections, which will be held on 23-26 May.
This would mean the UK – legally – cannot further extend its EU membership beyond June. This looks inconsistent with the party’s support for another Brexit referendum, which would require something closer to a one-year extension. It is hard to know how these policy inconsistencies will reconcile themselves.
One possibility is that the UK requests a short extension, but the EU counter-proposes a longer extension, on the grounds that a short extension would not give enough time to achieve anything different to what is currently on the table.
In any case, with parliament resolute in being against a no-deal Brexit, we continue to think the most likely scenarios are either a variant of PM May’s deal ultimately passing at some point in future (certainly not this week), or another referendum taking place. This week’s votes will likely be crucial in determining which of the two becomes more likely.
