Brexit Bulletin: Losing Control

(Bloomberg) -- Today in Brexit: After lawmakers voted against crashing out of the EU without a deal twice, the available options have narrowed to focus on a delay.

A postponement to Brexit now looks much more likely, after chaotic scenes in Parliament on Wednesday saw U.K. lawmakers vote decisively against a no-deal.

In the second of this week’s three big votes, Parliament backed an amendment to the government’s motion that rules out Britain crashing out of the European Union at any time. While this vote wasn’t legally binding, the strength of feeling among lawmakers was clear as four of Prime Minister Theresa May’s own ministers opted to abstain rather than vote against their principles.

Adding to the confusion of the night was the fact that May, who had initially tabled her own motion to avoid a no-deal Brexit at the end of March, was left telling lawmakers to vote in favor of no-deal. The attempt failed and Parliament voted against her motion.

The pound soared, touching the highest since June as investors judged that the risk of Britain crashing out of the EU without a deal had been taken off the table. Yet the voting once again demonstrated what Parliament doesn’t want, while doing nothing to suggest what kind of Brexit a majority in the House of Commons may support. 

We now know that May is likely to try to get another vote on her twice-rejected Brexit plan. Standing in Parliament Wednesday evening surrounded by braying lawmakers as her voice barely held up, May set one more deadline: March 20, the eve of the EU summit.

If there’s a deal by then, she’ll ask for an extension to June 30 - a short extension to tidy things up and get legislation through. If there’s no deal, her warning is clear: The EU will decide how long the extension should be.

With four pro-Remain ministers abstaining in Wednesday’s vote, May’s position is weakened even as she continues to tell lawmakers her plan is the best option. This throws up the possibility of more rebellion in the vote on a delay later Thursday.

Today’s Must-Reads

• Prime Minister May is already preparing a third vote on her Brexit plan following secret talks with the DUP and Brexiteers, according to the Times. Conservative MPs who voted against her deal on Tuesday are having private discussions with the Brexit Secretary and Attorney General Geoffrey Cox over possible changes to the legal advice, the newspaper says.
• As thousands of financial jobs and billions of dollars of assets flee London, Germany’s oldest bank is moving the other way. Berenberg Bank has seen it all since its 1590 founding in Hamburg. And now it sees opportunity where rivals are retreating from the Brexit mess.
• The view from across the Atlantic, in the New York Times: No other prime minister in recent British history has been so unable, repeatedly, to work her will in Parliament. Nor have the backbench members of a ruling party felt so free to rebel openly against their leader, the paper writes. 

Brexit in Brief

‘Sick Joke’ | Britain’s plan for tariffs under a no-deal Brexit was decried as too little, too late by business groups, who say it doesn’t go far enough to protect sensitive industries and poses a danger to some manufacturers. The plan fragments the U.K.’s internal market by applying different tariffs and limited checks between Northern Ireland and Great Britain. 

On the Markets | The pound gave back some gains after jumping to the highest since June on Wednesday, as traders queried whether the optimism was excessive given the many obstacles still remaining as Brexit unfolds. In comments before last night’s vote, the world’s biggest wealth manager advised against chasing the rally. 

Trade Risk | EU nations could be underestimating the importance of trade with the U.K. and therefore the impact of its leaving the bloc without a deal, according to a Finnish study published on Thursday.

Still Uncertain | A delay to Brexit this week would avoid the threat of Britain crashing out of the EU, but it wouldn’t necessarily be good for the economy. Uncertainty over Britain’s divorce is already hampering investment in the U.K., and postponing the exit date could further hold back economic growth. 

Self-Flagellation | Amid all of Wednesday night’s parliamentary chaos, one moment was deemed to be peak Brexit: A government whip, tasked with ensuring colleagues vote the way the government wants, defied his own orders to abstain on the vote on May’s motion.

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To contact the editor responsible for this story: Jones Hayden at jhayden1@bloomberg.net, Timothy Coulter "Tim"

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