Bottom-Line Brexit

 

What business needs to know about how Brussels sees the process of Britain leaving the European Union, as related to BCW by senior diplomatic and EU institutional sources.

Numbers game

A no-deal Brexit is more likely than not — if you believe the numbers racket that is now Brussels’ favourite parlour game: how many of her own MPs will oppose Prime Minister Theresa May when she puts her Brexit deal to them again? And what is the percentage probability of her losing the vote? But we reckon the chance of a no-deal by accident or design is lower.

In public and private, senior EU negotiators have spoken this week of a high and growing risk, as Mrs. May runs down the clock to force Parliament’s hand, of Britain crashing out without a deal on March 29 (or maybe some weeks later after a stay of execution). Brussels can do little more than follow Britain’s domestic upheaval — “watching the BBC and eating popcorn”, as one insider put it. But some now put no-deal as a better than evens bet. Some at 60-80 percent.

That is based on mounting pessimism about Britons’ ability to get their act together. “Like watching ferrets fighting in a sack” was how one EU official described a meeting with MPs.

Businesses spending millions preparing for chaos, as pressed to do by a European Commission warning of little sympathy or public help for those who don’t, might take some cold comfort in a no-deal. At least all that money won’t have been wasted.

But whatever Britain’s bookmakers say — Ladbrokes punters put the odds of a no-deal Brexit on March 29 at 7/4, or 36 percent — the smartest money around the rue de la Loi senses that a deal is to be had which May can sell in late March to avoid disaster.

Choreography

     Whatever their bets, there’s a consensus in Brussels on the timeline to the denouement:

Shuttle diplomacy this month has seen May effectively junk a vain effort forced on her by Parliament to reopen the Withdrawal Agreement to put an end-date on the Irish border “backstop”. Instead, she has tacitly accepted the EU offer of a parallel legal side-text spelling out that neither side wants the backstop to bind Britain to EU rules forever.

A package also including more language in the Political Declaration on trade aspirations could be struck around mid-March — though the EU is wary of jumping before May convinces it she can get a majority. The March 21-22 EU summit could wrap up a deal, maybe with duly theatrical weekend and overnight sessions, to be ratified by EU and UK lawmakers the following week. It would come with May requesting and getting an extension of EU membership of a few weeks to let the British Parliament pass tonnes of dependent legislation.

The pessimists reckon parliamentary chaos can still pitch the country into the “default” scenario of a no-deal shambles. Less gloomy folk see a real determination in Brussels to help Britain avoid more self-harm — all in the Union’s interests, of course — and favour an orderly exit, maybe in mid-May to avoid any messiness over the May 23-26 EU elections.

Bottom line? Businesses should not expect any certainty for many weeks yet.

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