Brexit: May's meaningful vote failed – what now?

Meaningful vote failed

On Tuesday 14 January 2019, Theresa May had her second chance at passing the Brexit deal via the so-called 'meaningful vote'. The vote failed with 432 of 634 MP's voting against the proposed Brexit deal. The vote was by many considered essential, if Theresa May was to be successful in avoiding a hard Brexit (i.e. a Brexit without a transition period), as she is pressed for time.

Immediately after the meaningful vote, the Labour leader Jeremy Corbyn tabled a vote of no confidence in the government. On Wednesday 15 January 2019, May won the no confidence vote, however just barely by a margin of 19 votes. Having won the vote of no confidence May now turns her attention to preparing her 'Plan B'. May and the sitting government must set forth their 'Plan B' within 3 days of the meaningful vote not having passed, i.e. by Monday 21 January 2019.

Possible Plan Bs

There are a number of possible steps to be taken after the failed meaningful vote, but the most likely are:

• No deal: If the UK parliament cannot agree to a Brexit-deal, which can also be accepted by the remaining 27 member states, the UK will leave the EU without a transition period and corresponding temporary legislation. For further details regarding the consequences of a no-deal scenario, please see our previous news article: Brexit: Close to a deal, but what's at stake? 
• Renegotiation: The UK government could attempt to restart negotiations with the EU Council in an attempt to 'tweak' the Brexit-deal so as to gain more support for the domestic meaningful vote. However, representatives of the European Council, along with president of the European Commission, Jean-Claude Juncker, have stated that the current deal is the best and only deal possible and that the EU would not renegotiate. More recently this general attitude has appeared to be loosened slightly with the other member states instead indicating that they would need to have some form of comfort that a new deal is possible of being implemented in the UK.
• Election: If the renegotiation of the deal isn't possible, Theresa May could attempt to gain support for the existing deal by calling for a general election in the hopes of replacing the disapproving members of parliament with approving ones. An election would however require 2/3 of all members of parliament to agree and is generally considered to be risky. 
• Extension: If the renegotiation process evolves into more than simply 'tweaking' the existing deal or if a general election is attempted, it may be necessary for the UK to request an extension regarding Brexit; currently set to March 29, 2019. An extension may only be granted if all 27 remaining member states agree. 

Finally, some speculate that a new referendum vote could be called, however, it would likely not be able to be held in due time before 29 March 2019 and would therefore have to be combined with an extension. It is likely renegotiation (be it major or minor) will be attempted before a new referendum vote. 

What should companies do in the mean time?

Based on the latest development it is more and more likely that companies may be faced with a no-deal scenario. Both the Danish Ministry of Business and Industry, the Danish Chamber of Commerce and the Confederation of Danish Industry urge companies to implement precautionary measures now based on the worst-case scenario being a no deal exit in order to be able to continue their business as unhindered as possible from 30 March 2019 and onwards.  

We continue to advise companies to follow the Brexit developments, especially regarding whether the UK applies for an Art 50 extension.

In the meantime further information can be found via the following sources:

• "Brexit-check list" created in cooperation between the Danish Ministry of Business & Industry, the Danish Chamber of Commerce, the Confederation of Danish Industry and the Danish Agriculture & Food Council (in Danish).
• The European Commission's Preparedness notices 

If you have questions regarding devising a plan or to which risks your company is exposed, we are happy to elaborate further.