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Analysis
Rebels take charge of Brexit

Rebels take charge of Brexit

EEA option back in headlines

by Chris Ostrowski in London

Tue 15 May 2018

Because of a handful of British parliamentarians, the UK's European Union exit process is now more convoluted than ever, only 10 months away from the formal date of departure. Neither Conservative Prime Minister Theresa May nor Jeremy Corbyn, leader of the Labour opposition, is strong enough to set a new direction. Local elections in England on 3 May, which broadly confirmed the political status quo, have if anything deepened the stalemate.

The House of Commons is more empowered than was envisaged when the Brexit negotiations started. That is exactly what May's government was trying to avoid. The UK supreme court has decided that parliament should have a final vote on the Brexit deal. Now the unelected House of Lords has suggested amendments to the EU withdrawal bill, allowing the House of Commons multiple options when it comes to a final vote in parliament later this year.

A political vacuum in Westminster has been filled by defeated Remainers within the major parties – rebel backbench MPs in the Tory party and Labour peers in the House of Lords. They are pitted against a vitriolic group of mainly Conservative hardline Brexiteers supported by much of the popular press.

Future options for the UK include membership of the European Economic Area, an opportunity to delay the exit date beyond March 2019 and, crucially, the option of remaining in the EU if MPs reject the final deal. The EEA possibility, which has been simmering since the referendum vote in June 2016, has entered the headlines again, not least because Norway has signalled its openness to the idea.

Erna Solberg, the prime minister, told the Financial Times the EEA option was readily available. 'I think we will cope very well if the Brits come in. It will give bargaining power on our side too. And it would ease Norway's access to the UK,' she said.

That is an offer Brexiteers in and beyond the Conservative parliamentary party may have to consider. The bargaining instruments on both sides of the British political divide are now becoming potentially more venomous. For the first time since the negotiations started, 'no deal' with the EU over withdrawal may well mean, much to the horror of Brexiteers, 'no Brexit'.

David Miliband, former Labour foreign secretary, re-entered the political stage on Monday to join a cross-party campaign for a soft Brexit, declaring his wish to stay in the customs union and single market. Committed Leavers such as Boris Johnson, the foreign secretary, and Michael Gove, the environment secretary, have kept up a withering crossfire against May's suggestion of an innovative 'customs partnership' with the EU. They say it is unworkable – and it has anyway already been rejected by the European commission.

England's municipal elections on 3 May played a role in the Brexit imbroglio, even though the results were more about local issues such as rubbish bin collections and bus timetables.

This did not stop the UK media speculating about projected vote shares in a general election. Journalists wanted an enticing leadership crisis on which both May and Corbyn could flounder, thereby generating still more Brexit uncertainty.

In the event, May escaped unscathed. Labour can emphasise gains in hitherto untouchable Tory council wards, but these elections offered neither party a clear route to victory at the next general election.

The Tories moved forward in older, more settled communities far from the major cities. Labour made its biggest gains in areas that voted Remain in the 2016 referendum with high levels of immigration and more mobile populations.

Neither the Tories nor Labour have a clear vision of Brexit. The only parties prepared to discuss Brexit at the local elections were the minor ones: the Greens, Liberal Democrats and UK Independence party. They are far too weak to make an impact on the critical decisions the UK faces.

Chris Ostrowski is Head of Business Development at OMFIF.

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