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Brexit Update: Diminishing Confidence

Earlier today, it was announced that Theresa May would face a vote of no confidence as leader of the Conservative Party.

The vote will take place this evening with the result announced around 9pm.

The rules of the contest are simple: if a majority of Conservative MPs vote no confidence, the Prime Minister will be removed as leader; if she survives the vote, no further leadership challenge can take place for 12 months. Should she lose, the process for electing a new leader takes rather longer, involving rounds of voting by MPs followed by the final two candidates being put to a vote of Conservative Party members. It is thought that the earliest a new leader could be appointed under this process would be mid-January.

The leadership challenge follows two days of turmoil in the Brexit process, with the government pulling Tuesday’s Commons vote on the withdrawal agreement after accepting the inevitability of a heavy defeat (some estimates were that the vote would be lost by over 200 votes, one of the heaviest government defeats in modern times).

The last-minute decision to delay the vote was itself extremely controversial and seen by many MPs as a further attempt by the Prime Minister to run down the clock in the hope of bouncing Parliament into supporting the deal as the 29 March exit date approaches. This appears to have been decisive in convincing enough Tory MPs to submit the necessary letters to trigger a leadership challenge, and the 48-letter threshold was met while the PM was busy touring European capitals trying to obtain further concessions which might make the withdrawal agreement more palatable to Parliament.

If the Prime Minister survives the leadership vote, she still faces the risk of a vote of no-confidence in her Government being tabled in the House of Commons. The Labour Party has so far resisted calls from other opposition parties to table a vote as it is expected that the Government would survive with the support of the DUP; however, it is quite possible that the Parliamentary maths will change following the leadership vote, regardless of the outcome.

Of course, all of these events are taking place against the clock, with the UK’s departure from the EU still set for 29 March 2019. The reality any Prime Minister will face is that the withdrawal agreement must be voted on in Parliament by 21 January, and appears extremely unlikely to pass. There was already uncertainty about what the Government would do after the likely defeat of the deal; now there is also a lot more uncertainty about who the Government will be by the time the deal comes back to Parliament.

Following Monday’s CJEU ruling on the revocability of Article 50 negotiation there is increasing talk of Brexit being delayed (during her press statement this morning, Theresa May cited the risk of delay or cancellation of Brexit if she was defeated as leader as one reason to support her).

Whilst this must become more likely as we get closer to 29 March with no deal in place, it is difficult to see anything other than uncertainty for at least the next 4 weeks while we wait for either the Commons vote on the deal, the conclusion of a Conservative party leadership election – or possibly both. For those businesses that had set the end of the year as their final deadline for implementing no-deal preparations in the event that the form of Brexit was still not agreed, the developments of the last two days will now mean a move to full-scale contingency planning.

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