January 17, 2019

Brexit: Tell Me What You Want

The UK Parliament took a vote on Brexit this week and the outcome was a complete flop for British Prime Minister Theresa May. The British Members of Parliament soundly rejected the deal, 432 to 202, resulting in the largest defeat for a Prime Minister in history.

With fewer than 80 days left until the Brexit deadline, it's quite alarming that the UK still cannot agree on what kind of a deal it wants. The biggest point of contention at this stage is something called the “Irish backstop" - something that was not even mentioned at the time of the Brexit vote in 2016.

Some background: The Good Friday Agreement in 1998 ended a bloody history of thousands of deaths between Northern Ireland (which is part of the UK) and the Republic of Ireland (which is part of the EU).

A Brexit deal needed to avoid establishing a hard border between the two Irelands. But that makes it impossible to have different customs systems in the two countries, meaning that until this dilemma is resolved, the entire UK will have to remain in the current EU customs union.

Prime Minister May's deal was not a bad one, especially from the financial market's point of view. With no trade barriers between the UK and the EU, as is the status quo, it would truly have been a "soft Brexit."

However, the overwhelming majority of Parliament voted against it.

What do they want?

  1. So-called “Euroskeptics" within May's Conservative party want a "hard Brexit," which means that they don't want to remain in the EU's customs union at all. They want to completely divorce themselves from the EU and make bilateral trade agreements themselves. It's hard to understand how that is achieved without a hard Irish border.
  2. The DUP (Democratic Unionist Party), which is the main party of Northern Ireland that opposed May, does not want the Irish backstop at all - even though the EU has said there will not be a deal without that backstop.
  3. Then there is the Labor Party, which wants to remain in the EU - a completely opposite view - and reject Brexit altogether.

Given this conflict of interest, it clearly is not an easy task to unite the UK in one voice. But that needs to happen - so the question becomes: What do the majority of people in the UK really want?

Our View: This is clearly a big mess and no party seems to be willing to compromise so that the UK can unite. Given the different ideologies, it may be that eventually Northern Ireland will have to make a tough decision on whether it identifies more with the UK or with the Republic of Ireland.

And, with Scotland also opposed to Brexit, the discussion may eventually extend into a realignment of what it really means to be the "United" Kingdom.

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