Conservative Prime Minister Theresa May is set to continue her discussions with the leaders of the European Union in Brussels over the next few days, after MPs narrowly voted to back her proposal for her to renegotiate her Brexit deal.
MPs voted in favour of May’s deal 317 votes to 301 – based on amendments made over the backstop in Ireland – the insurance policy that is designed to avoid a ‘hard border’ on the Republic of Ireland and Northern Ireland border, in the event of a ‘no deal’ Brexit.
However, the EU announced that it will not negotiate or change the legal documents that have already been agreed previously by Theresa May. Many political leaders on the continent have publicly stated that renogotiation is off the table – including French President, Emmanuel Macron.
May’s unconventional victory follows two weeks of uncertainty after MPs unanimously rejected her original Brexit proposal.
The Prime Minister must now find a way to successfully put these changes in effect, before the March 29 deadline – when the UK will leave the European Union. However, MPs also supported an amendment which rejected the possibility of a ‘no deal’ Brexit.
Labour leader Jeremy Corbyn said that scenario should be ruled out entirely, and is set to meet May to discuss the next steps.
Responding to last night’s votes in the House of Commons, Stephen Martin, Director General of the Institute of Directors, said:
“While it is something that MPs have managed to form a majority in any vote, the path ahead is still far from clear. The Prime Minister clearly faces a difficult task in winning a compromise on the backstop. However, if the choice is between trying to change the deal and leaving without one, business will have to hope the EU can be flexible and consider whether any legal changes at all could further clarify that the backstop is not a permanent fixture.
“With 29 March still on the statute book as our point of exit, every passing day brings no-deal draws closer, and sees more firms forced into activating potentially unnecessary and costly contingency plans – many of which involve moving business out of the UK. Much more information on what would happen on day one of no deal is needed to ensure any adequate level of business readiness. We still don’t know what the UK’s applied tariffs or full changes to customs processes would be, and there is virtually no guidance on planning for firms in Northern Ireland.
“The Prime Minister’s commitment to a second Meaningful Vote in a fortnight is helpful in the face of these pressing timescales. The PM must go one step further, however, and set out now in clear terms what would happen if this second vote is lost. Business leaders need to know whether that would mark the point of no return for leaving without a deal.”
With the deadline for Britain’s exit from the EU looming and no plan in place, there is still a chance the UK could leave with no deal. Stuart Price, Partner and Actuary at Quantum Advisory, looks at how a no deal scenario could affect UK pensions.
“There’s no doubt a no deal is going to cause disruption, it’s just a question of how much disruption and how long it will last.
“Much of the money we pay into our pensions is invested as shares in UK companies. When the companies do well, our retirement pot grows. If, come 29 March, there was no agreed deal, global investors may be fearful about investing in UK companies. Shares in those companies could then fall and in turn your pension fund would decrease in value. If you are lucky enough to have a defined benefit pension, then a fall in investments would not impact what you receive. However, most of us have defined contribution arrangements that would be impacted. As worrying as this might sound, pensions are long term investments, so unless you are about to retire soon from a defined contribution arrangement, then there is time for things to improve. In addition, the majority of UK pension funds are invested globally and across a large number of different asset classes so that should also dampen down any falls.
“Ultimately, prosperous pensions require a strong investment performance which can only be achieved with strong economies – here in the UK, across Europe and globally. It’s unclear how Brexit will affect the UK’s economy, so for now, unfortunately all we can do is wait and watch.”
Commenting on the latest votes in Parliament on Brexit, Phil Smith – Managing Director of Business West said:
“Another day lost while the clock is ticking. Government and parliament are still going round in circles when businesses and the public urgently need answers.
“The real-world result of Westminster’s interminable wrangling is market uncertainty, stockpiling, and the diversion of staff, money and investment. For every big-ticket business announcing high-profile Brexit-related decisions, there are many more quietly making the changes they need in order to safeguard their operations in the event of a disorderly Brexit. The net result of this displacement activity and uncertainty is slow but very real damage to the UK economy.
“A messy and disorderly Brexit on 29th March would cause widespread damage to businesses and communities across the country. Neither Government nor many businesses are ready for a no-deal exit in two months’ time, and it must not be allowed to happen by default.”