Monday 21 October 2019

Richard Curran: 'Scale of May's Brexit deal defeat will determine her next move'

British Prime Minister Theresa May may return for a second vote after Christmas if her Brexit plan suffers a modest to moderate loss. Photo: Getty
British Prime Minister Theresa May may return for a second vote after Christmas if her Brexit plan suffers a modest to moderate loss. Photo: Getty
Richard Curran

Richard Curran

Scriptwriters for British Prime Minister Theresa May must be very busy these days. In political situations of uncertain outcome it is simple professionalism and good planning to prepare different statements for political leaders based on different outcomes.

So what statements are being prepared in 10 Downing Street? Whichever writer gets the job of preparing the statement welcoming the passing of the Brexit deal in the House of Commons on Tuesday won't have to spend too long on it. It is extremely unlikely it will see the light of day.

For the Prime Minster herself she cannot intimate what her intentions are when her Brexit deal is rejected by the British parliament. She is pushing hard on the line that it is her deal, no deal or no Brexit. But if, or presumably when, her deal is rejected, she has to have something to say.

It isn't just about having a Plan B, as having a something to say in Westminster when the time comes. She could announce that she is stepping down. She could opt for a holding statement that says she will take stock of the outcome and decide in the coming days on the next course of action.

But to be realistic, "let me get back to you on that", simply won't cut it.

British Labour Party leader Jeremy Corbyn and her own Conservative hard Brexiteers will want to push the agenda forward, but using what mechanisms?

The scale of the defeat will be a significant factor in deciding what she does next.

A modest to moderate loss and she may have another go at changing minds over Christmas and returning for a second House of Commons vote on roughly the same deal.

A massive loss by 60, 80 or even 100 votes and she faces resignation or the biggest U-turn in British political history.

Here are the options.

1 No deal: She could let things drift and unless there is a new intervention in the process, Britain will leave the EU with no deal in March. This would be disastrous for the British economy, very detrimental to the Irish economy and throw the Border question into dangerously uncertain territory. The British parliament is unlikely to let this happen.

2 A second referendum: Theresa May has been so strongly set against a second referendum, she is unlikely to be the Prime Minister to call for one. It would only arise if her Brexit deal is dead and buried, in which case she is likely to be gone from office. A second referendum could be called under a Labour-led government but there are no guarantees that Corbyn would as prime minister opt for it. He may faff around for a while with Brussels trying to get a different deal.

A Tory leadership contest and a new Conservative Prime Minister could yield a second referendum but it is hard to see without a general election.

3 A Norway-plus deal: This is now being talked about as a tidier, speedier, less complex off-the-shelf solution. It would see the UK stay in the customs union and pay money for access to the single market. It would not deliver control of borders because the UK would be open to immigration from the EU. Control of immigration from EU countries was a major reason why many people voted leave in the referendum.

It would not deliver a totally open border on the island of Ireland. And there are no guarantees the British would even be granted a Norway-style deal by Brussels.

Norway is a small country with a population of five million people. The UK is the fifth-largest economy in the world with 65 million people.

4 May's Brexit deal: Somehow, a version of May's deal makes it through parliament on the second or even third time of asking. We have a pretty good idea of what this means for Irish business - a lengthy transition period; and orderly withdrawal; a guarantee of an open border.

However, what is lost in all of the bickering over the backstop is the extensive negotiations required in the coming years to reach a suitable trade agreement between the EU and the UK under the May deal. In all likelihood those talks will not deliver a comprehensive trade deal by the end of 2022. That is just three years from now.

Those with experience of trade deals suggest the UK will then face another cliff-edge Brexit conundrum all over again in three years' time. The Border backstop might be secured in this eventuality, but little else. A deadline, a new ticking Brexit time bomb.

If we thought on this side of the Irish Sea that the British political establishment has been in a state of polite chaos, it is only getting started.

Greencore has to live with being a UK market play

One company in the front line of all of this uncertainty is Greencore. It announced a solid set of results during the week racking up reasonable growth in its Food-to-Go platform.

But as it brought, what one broker described as, "closure to its US journey", the group is primarily focused on, and now reliant on, the performance of the UK economy.

Greencore shares dipped after the results as CEO Patrick Coveney said its UK concerns are 100pc Brexit-related and near-term.

The challenges for Greencore are threefold: economic uncertainty, disposable income and staffing. Uncertainty will impact on its share price as we are unlikely to see any let-up in the Brexit rollercoaster any time soon.

Brexiteers called it Project Fear 2.0, but economic assessments from the likes of the Bank of England on the implications of a no-deal Brexit suggest people won't be buying as many sandwiches in future in such a scenario or growth potential will be weakened at the very least.

On the staff front, Coveney said the company was well on top of the workforce issues and that any labour concerns arising from the UK's exit from the EU, would be a medium-term issue. Half of its employees come from the UK, with 35pc non-British EU nationals and 15pc coming from outside the EU. All businesses in these low-pay sectors have a level of staff churn and if fewer workers enter the country from these countries, it will put pressure on wages.

Pub business JD Wetherspoon issued a profit warning on the back of wage rises. Rising staff costs caused by a tighter labour market have begun to affect other British businesses too. There are fewer EU workers in the UK than two years ago. But rising wage costs at this stage are more about a tight labour market than Brexit exoduses from the country. Unemployment is in the UK is at its lowest level since the mid-1970s. This may not be Brexit-related - yet.

In the short term Greencore has put in place plans to ensure it has access to ingredients etc in the event of a no-deal Brexit. Longer term, a no-deal Brexit would see the cost of ingredients rise in an economy with lower growth prospects.

Based on Greencore's actual trading performance in the last year, the Brexit-factor may be overstated. But it won't lift until there is some clarity.

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