WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

By Richard Grieveson

British Conservative members of parliament (MPs) have submitted the 48 letters required to trigger a vote of confidence in the leadership of party leader and Prime Minister Theresa May. The vote will be held on the evening of December 12^th. Ms May needs to get the support of a majority of Conservative MPs (158 votes) in order to survive. If she loses, she will have to stand down and a leadership contest will take place.

Why now?

There have been reports of letters trickling in for weeks. However, it seems that the Brexiteers had been waiting until they felt sure that they could win, because if they fail to topple Ms May, another vote of confidence cannot be held for 12 months. This implies either that they really think they can win the vote now, or that they are becoming desperate as time runs out before the end of March 2019. A further possibility is that they believe even a fairly narrow win for Ms May would at least force her to outline a timetable for stepping down.

The line in the sand for the Brexiteers appears to be two related things: the status of Northern Ireland and the terms under which the UK could leave to 'backstop' if it wanted to. It has felt at times during the Brexit negotiations that many hard-line Brexiteers have been relatively indifferent to Northern Ireland, but this now seems to have changed. Scottish Conservatives have also been worried about the precedent that a special status for Northern Ireland would set, and the potential boost it would give to the Scottish National Party (SNP) in pushing for a second independence referendum there.

Scenarios from here

The confidence vote could go either way. However, the consequences of each may not even by that different:

Scenario 1: May wins. Even if this happens, it is highly unlikely to be a decisive victory. Ms May could anyway be forced to make a clear commitment to step down fairly soon anyway. She could soldier on for some time, but this will not change the parliamentary arithmetic. She would still need a big concession from the EU to get her deal through parliament, and even then it would not be guaranteed to pass. The situation would therefore remain the same as now: either a second referendum or new election to break the parliamentary deadlock, or a drift towards no deal and a hard Brexit at end-March 2019.

Scenario 2: May loses. Many are sceptical that the Brexiteers really have the 158 votes to topple Ms May, but it does seem that here support in the party’s centre ground has taken a hammering recently. This would trigger a leadership contest, which would probably be won by a Brexiteer. Article 50 would need to be extended (if the EU27 allows it). That also wouldn’t change the UK parliamentary arithmetic, although it is pretty likely that Ms May would be replaced by someone more hard-line on Brexit than her (she was, after all, at least in theory a remainer). This means that the likelihood of a “no deal” Brexit would increase.

Either way therefore, it is hard to see how parliament could pass anything like the deal currently on offer. The EU27 may move a bit, but this is questionable, and it is highly unlikely that any changes from the EU27 would be significant enough to get the deal through the UK parliament. It is also clear, however, that there is a significant parliamentary majority against no deal. That means that, whether May stays or goes, either a second referendum or another general election are quite likely.

Second referendum: careful what you wish for

A second referendum is now much more likely than was the case even a few months ago. The Conservatives may well prefer this option rather than risk a general election and a Labour victory. Many in the party are terrified of a government led by Jeremy Corbyn.

The result of a second referendum would depend heavily on what was on the ballot. But, despite widespread hopes in the EU27, it is far from clear that this would be won by remain.

The Brexit process has awoken a strong pro-EU streak among much of the British population (which was sadly lacking before the referendum). However, this does not mean that the polls have shifted significantly. Moreover, there is a rebellious mood in the country, which has also been intensified in some ways by the Brexit process. Very few people in the EU27 appear to appreciate the way that many in the UK sees Brussels’ negotiating stance as unreasonable, and the extent that this has gained traction, even among some remain voters. For various reasons, including historical, the UK does not feel the safety net of the EU as most or all other EU27 countries do. There is a greater willingness than anywhere else to make the leap into the unknown, and if necessary to pay the economic price. Also, the doom-laden economic scenarios of a Brexit vote widely publicised before the referendum (as part of the so-called “project fear”) have clearly not played out (the UK economy has slowed, but to nothing like the extent that most economists predicted). Current warnings from economists that a “no deal” Brexit will have major negative economic consequences (something that we would agree with) therefore carry limited weight among the general population in the UK.

Brexit was about many things. The average citizen of the UK does not see the EU in the same way as the average citizen of almost every other EU country. Brits do not work for the EU or take part in the Erasmus programme to the same extent as those in most other member states. Many still look much more towards the US than continental Europe. There is also a point about sovereignty, greater trust in domestic institutions, and a feeling of still being powerful enough to count on the global stage without being tied to a bigger entity (among the EU27 only France is in any way comparable on the last point at least). But in the end, as we have argued in detail previously, the single biggest factor behind Brexit was discontent with decades of mass immigration, and in particular the spike in the number of people arriving in the late 1990s and early 2000s. A majority vote for remain in any second referendum, on current terms, with little or no control over immigration from the rest of the EU, remains far from assured, even in the context of the chaos of the last two and a half years.

One can also argue that Ms May’s deal does basically deliver on the referendum result, which was a marginal vote for leave. It brings back control of migration and fisheries policy, and reduces payments into the EU budget substantially, for example. If this option is on the ballot paper, and is presented in this way, it is not unthinkable that many leavers and remainers could support it. It is also reasonably close to the Labour position (as much as it is possible to make out what that is). Even staying in the “backstop” for many years, meaning that the UK could not conclude trade deals independently with other countries, would not necessarily be a major issue. Many Brexiteers care deeply about this, but it is not clear that the public at large does.

General election may not be conclusive

If a new general election is held, Labour could well win. However, it really says something that they are still trailing in some recent opinion polls, despite the sense of chaos in the Conservative Party. The election would naturally be focused a lot on Brexit, an issue on which Labour do not really have a clear position, which could handicap them. Either they would continue to waver on the question of the EU (which could see many of their remain voters switch to the Liberal Democrats in England and Wales and the SNP in Scotland). If there were to take a stronger position one way or another on Brexit, they could lose support from either their remain or leave voters.

A general election may well end up delivering a similar parliament to the current one, and thereby leave Brexit roughly where it is now. Part of the problem is that a large part of the Tory party is intent on a unicorn Brexit, while the leadership of the main opposition which basically doesn’t care about Brexit, and sees it as a distraction from more important goals. Those who do care—the Liberal Democrats or the SNP in Scotland—are marginal forces at the national level, and have failed to gain significant new support in light of the Brexit mess (which in itself is quite revealing about how the UK public ranks the issue in terms of importance). Nevertheless, it is probably true to say that a Labour victory would make the so-called 'Norway option' or 'soft' Brexit more likely.

What will the EU do now?

If Northern Ireland is indeed the hill on which Brexiteers are willing to suffer the consequences of a hard Brexit, the question of a potential softening of the EU position becomes relevant again. Since at least December 2017, the EU’s red lines have been clear, and the whole Brexit process has basically been about UK domestic politics. Despite the bluster and promises of various politicians, the UK has backed down on almost everything, until now. It looks unlikely that the EU will give significant ground on Northern Ireland and conditions for leaving the backstop. Although a recent article in staunchly pro-EU Financial Times suggesting some wavering was interesting, the EU’s position on defending the interests of smaller member states is clearly set out. It does appear though, that at least in Germany, the fear of a no-deal Brexit is growing.

photo: iStockphoto/egal