BofAML _ Parliament to vote, Brexit will happen

Redacción - Martes, 24 de Enero

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UK Watch: Parliament to vote, Brexit will happen •  The Supreme Court today ruled that an Act of Parliament is required to trigger A50 but devolved powers have no veto. • This keeps the UK on a path towards a 'hard Brexit'. Risks of a second Scottish referendum have risen.• Amendments will be tabled but should not derail the Government's end of March deadline in our view.

Supreme Court reject UK government's appeal

The Supreme Court today ruled that an Act of Parliament is required before Article 50 can be triggered, rejecting the UK Government's appeal on this decision. The Government must therefore pass a bill in both the House of Commons and the House of Lords before it can start the formal Brexit negotiations.

Furthermore the Supreme Court ruled 'the devolved legislatures do not have a veto on the UK's decision to withdraw from the EU'. In their view, the convention that the regional powers be consulted on matters impacting them is political, not legal. This ruling not only means the Government can trigger Article 50 without their say, it leaves Westminster with greater control over the extent to which the devolved powers are consulted on the terms of Brexit going forward.

Enter Parliament, stage left

We continue to expect the Government to be able to successfully trigger Article 50 by the end March. There is likely enough time and well within Parliament for the triggering Bill to be presented, debated and approved by both Houses over the next two months. Indeed, David Davis confirmed as much in his response to the court ruling. Statements by the Government and Opposition also consistently emphasise their wish to respect the result of the referendum. The profit warning from BT today may also prove a cautionary tale of how Brexit uncertainty is likely already weighing on business investment decisions and consumer confidence. 

The key issue for investors will be whether dissenting MPs can successfully amend the Bill to increase scrutiny or parliamentary involvement in the negotiations. Suggested amendments include transparency on the negotiating strategy (via a white paper), progress reports in parliament and forcing ministers to renegotiate with Brussels if MPs vote down a final deal. This latter amendment, being pushed by Jeremy Corbyn, warrants attention. The worry from many MPs is that they will be given a 'take it or leave it' style ultimatum at the end of the negotiating period. The possible wording would require MPs to vote on the Government's proposed deal before the deadline with enough time to go back to negotiations with Brussels if rejected.

Whether the UK and all 28 EU governments could agree on two deals within two years might prove wishful thinking though. Further, it is unclear what the recourse would be if the Government were unable to negotiate a better deal second time round or rejected the next deal. Article 50 suggests the UK would exit the EU without a deal unless it was revoked and the UK decided to stay in the EU. So it is unclear how this amendment would actually empower parliament.

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