No parliamentary majority for the negotiated Brexit deal means the likelihood of a no-deal Brexit is increasing.

GD/AD – 01/2019

As expected, Prime Minister Theresa May’s deal with the European Commission was voted down in Whitehall. Many of her own party members and her ‘tolerated partner’ from Northern Ireland’s protestant Democratic Unionist Party rejected her deal, as did Jeremy Corbyn’s Labour opposition party. The Labour Party is pushing for new elections and initiated a vote of no confidence as a result of May’s defeat, which she comfortably survived.

The culture of debate and party loyalties are quite different in the UK than we know from the German Bundestag. So far, neither the sitting Labour parliamentary faction nor its leader and Shadow Prime Minister Jeremy Corbyn, who himself is a Eurosceptic, albeit because of reasons other than those of classic Brexiteers, have presented a clear European policy concept, let alone a solution, for preventing the so-called ‘horror scenario’ of a no-deal Brexit. Therefore, attempts now to try and find consensus across factions may already be too late. 

The range of opinions includes calling for a new referendum. Currently, polls suggest that such a referendum would result in a narrow win for the remain campaign. The chances of this happening are slim and, in terms of timing, would be impossible before the exit deadline of 29 March 2019. In addition, the legitimacy of a new referendum is questionable, especially if, as expected, the new win were to be as narrow as the last one.

The fundamental flaw of having a referendum in 2016 on a complex issue, which is extremely difficult for voters to fully comprehend, has since revealed a chain of negative consequences with a lack of clarity for millions of people. This does not apply so much to statutory insurance, but it definitely does to customers of private financial and insurance products, whose validity in EU countries is secured by various means such as ‘passporting’. This means that a financial product approved in one EU country can then be sold on the market in other EU countries.

According to the Bank of England, around 30 million such contracts in the EU and around six million in the UK would be void if they ran beyond 29 March 2019. Even if those in the know were to move their policies via a Part VII transfer to another jurisdiction, as suggested by Welt Online, this would be too costly and time-consuming for most. As reported, every such transfer would have to be confirmed in court. In the opinion of industry insiders, this technical problem is unlikely to be fixed with quick policy solutions in the usual style. Rather, it requires suitable solutions that are unbureaucratic and pragmatic in nature, something which is rarely found in London’s current fiery environment.

The debate in Westminster has once again highlighted the strong emotions of the situation. Accordingly, a no-deal Brexit is becoming more and more likely, despite the countless negative consequences. According to reports from BBC Online, France is actively preparing for this outcome, followed by other EU countries, including Germany. The importance of preparing for a no-deal Brexit is growing.

The spectrum of effected institutions and individuals is wide, including tourists looking for medical treatment where the EU health card is accepted; posting regulations for workers and their employers; market access issues; customs formalities; import VAT (with or without input tax deduction?); foreign students in terms of their UK university fees; and an almost countless number of everyday issues. 

Critics are of the opinion that Jeremy Corbyn’s position on European policy remains unclear. If Labour had taken a clear stance for remaining in the EU prior to the referendum, it is unlikely that the outcome would have been as it, regrettably for many people, now is.