Are We Nearly There Yet?: Revisiting the Politics and Processes of Brexit

In the summer, Sandy Nairn, Chairman of Templeton Global Equity Group and CEO of Edinburgh Partners, authored a paper entitled The Politics and Processes of Brexit. His analysis drew on insights from former diplomat Lord Kerr, an advisor to Edinburgh Partners and one of the authors of Article 50 of the Treaty of Lisbon, which outlines steps a country must take to leave the European Union. The paper explored a number of scenarios the United Kingdom faces on its path to Brexit. One of the questions Nairn posed was “Are markets underestimating the chances of the United Kingdom not leaving?” In this update, he examines the current situation and revisits that question.

After a tumultuous few days for UK Prime Minister Theresa May and UK financial markets, there remains very little we can say with absolute certainty about Brexit.

A withdrawal deal agreed upon by UK and European negotiators is set to go to Parliament in the second week of December. However, it has drawn derision from all sides, and the key question for most observers is whether the UK government can secure enough votes for it to pass.

The agreement, as it stands, sets out the details of the financial settlement governing the United Kingdom’s departure from the European Union (EU). It also includes a section on citizens’ rights after Brexit, for EU citizens in the UK and British citizens elsewhere in the EU.

Several of the deal’s provisions are likely to prove sticking points for some crucial players.

The treatment of Northern Ireland in particular looks to be an obstacle. The withdrawal deal proposes a backstop that would maintain an open border between Northern Ireland and the Republic of Ireland, in the event that there is no trade deal agreed by March 29, 2019.

However, that arrangement has been rejected by Northern Ireland’s Democratic Unionist Party (DUP) because it treats Northern Ireland differently from the rest of the United Kingdom. Crucially, May relies on the support of the DUP for her parliamentary majority. Losing DUP support could threaten the Conservative Party’s ability to remain in power.

Ardent Brexiteers within the Conservative Party are also unhappy with the deal. They feel the continued influence of Europe over key UK policies, as set out in the withdrawal agreement, remains too large.

For the Scottish Tories, uncertainty regarding the proposed fisheries policy might suggest that the Scottish fishing industry is again being sacrificed. A number of Scottish Tory members of Parliament rely on the fishing community for votes.