UK: A 3-month delay of Brexit looks very likely

3 min
Ana Boata
Ana Boata Senior Economist for Europe

In an attempt to avoid more rebellion from her party and even a cross-party alliance that would have weakened her further, PM May came out with a clear path to Brexit: (i) by 12 March at the latest the House of Commons will vote on whether to accept or reject PM May’s EU Withdrawal Agreement that she continues to renegotiate with the EU; (ii) if MPs reject that deal (likely in our view), they will vote on 13 March at the latest on whether to leave the EU with no deal; (iii) if Parliament votes against a no-deal Brexit (very likely), that option will be off the table and the House of Commons will vote on a short extension of the 29 March deadline – probably until end-June as on 2 July the new European Parlia­ment is inaugurated. If Parliament votes in favor of an extension (very likely) PM May would most pro­ba­bly get the unanimous approval from the EU at the 21-22 March Summit. However, this last-minute solution does not take-off the uncertainty that is weighing on the UK economy (read here) while it opens three relevant options: (i) a renegotiated Brexit deal with an end-date to the Irish backstop; (ii) a second referendum; (iii) a renegotiated Brexit deal toward a permanent customs union (a softer Brexit).