LONDON — British members of Parliament nixed a no-deal Brexit in a vote late Wednesday, and will likely ask the European Union to extend the country’s exit date past the March 29 deadline.
MPs voted 312 to 308 in favor of killing the no-deal option “in any circumstance,” sending the pound up 0.7 percent to $1.32. Less than an hour later, MPs voted 321 to 278 on a separate, similar amendment, and reconfirmed their decision to reject a no-deal Brexit. Following that vote, the pound rose to $1.33.
The result will come as a relief to British businesses and organizations fearful of the consequences of a no-deal or “hard” Brexit. Earlier in the day, Philip Hammond, Britain’s Chancellor of the Exchequer, who is in charge of the nation’s purse strings, said leaving with a deal would bring a “Brexit dividend” to the country. A no-deal exit, he added, would see the economy suffer with higher unemployment, lower wages and higher prices for consumers.
Hard-line Brexiters would argue that postponing the March 29 deadline would accomplish little, and create more uncertainty and confusion in the markets. They would also argue that the threat of a no-deal Brexit was the only bargaining chip that Britain had left in its divorce proceedings with the EU.
Prime Minister Theresa May said Tuesday night that if MPs pull the no-deal option off the table and ask for an extension, “the EU will want to know what use we mean to make of such an extension and this House will have to answer that question. Does it wish to revoke Article 50? Does it want to hold a second referendum? Or does it want to leave with a deal, but not this deal?”
On Wednesday, May acknowledged “there is a clear majority against leaving without a deal,” but she also encouraged MPs to reconsider her withdrawal deal, which they rejected for the second time on Tuesday. She also said that a “long extension” to the Brexit deadline would cause problems, as Britain would then have to take part in the European Parliament elections in late May even though it plans to leave the EU.
This has been a make-or-break week for Brexit, with MPs gathering at the House of Commons for three distinct votes: On Tuesday, they shot down Prime Minister Theresa May’s Brexit deal, while on Thursday they’re planning to vote whether to ask the EU to extend the withdrawal deadline.
As reported, a hard Brexit would likely cause immediate, short-term problems with cross-border trading, movement of people, tariffs and disruption to businesses that have not made plans for such a scenario.
On Wednesday, the British government set out its strategy in case of a no-deal Brexit, promising to slash import tariffs on nearly 90 percent of goods, and sensitive areas such as agriculture and automobile industries.
Had MPs voted to keep a no-deal option on the table, it would have sent the U.K. hurtling toward a “hard,” or unmanaged, Brexit on March 29.
Wednesday night’s decision also whips up even more questions about Brexit, and what sort of updated deal – if any – May and her government can piece together if the EU even agrees to an extension.
Also, May could decide to resign, or she might be ousted by her own party and replaced by another Conservative, or she could call a general election. She has, however, said that a fresh election would cause even more confusion and disruption for voters.
She could also call another referendum, asking the public to vote on her deal or to decide — again — whether or not they want to break from the EU.