On January 15, 2019, Theresa May suffered the heaviest parliamentary defeat of any British prime minister after her Brexit deal was rejected by the MPs by an overwhelming majority of 230 votes.[1] Britain is supposed to leave the European Union (EU) in March 2019, but it still has to finalize the deal on which it will be leaving the EU.
After months of prolonged negotiations between the EU and the UK, both the parties finally agreed to a Brexit deal in November 2018.The Brexit deal consists of a 585-page withdrawal agreement which sets the terms of the divorce between the EU and UK. The main terms of the agreement include:
· The UK will leave the EU on March 29, 2019 but will remain part of the bloc’s single market and will be bound by its rules until December 2020, till the two parties agree on new trade relationship;
· UK will pay £39 billion in order to cover its contribution to the EU budget till 2020;
· EU citizens will continue to have the right to live and work in UK;
· There will be no hard border between Northern Ireland and the Republic of Ireland. The Irish border should remain free of custom posts and other obstacles.[2]
However, this deal has been rejected by the British Parliament and now Britain is likely to leave EU on March 29, 2019 without a deal. MPs even from May’s own party were not in favor of EU-UK exit deal and voted against her by three to one.[3]Pro Brexit MPs are against this deal because they fear that Brussels would gain influence over UK and UK would be left as a “rule taker”, trapped in the EU’s regulatory framework.[4]
Now that May has been unsuccessful in getting the deal through Commons, the following scenarios are possible:
· A no-deal scenario in which UK moves out of the EU without a deal;
· Having another vote after three week of losing the vote;
· Conducting another referendum which is only possible if the government brings forward a legislation to hold a second referendum supported by the majority in the House of Commons;
· A general election after a no-confidence vote in the PM;[5]
According to Confederation of British Industry, a no-deal Brexit would cost shrinking up of GDP by 8 per cent which would lead to many people losing their jobs.[6]According to worst case scenario estimates, it is expected that in a no-deal scenario, the unemployment would increase by 7.5 per cent and interest rate could rise to 4 per cent.[7] Cost of doing business would rise as businesses will have to face new tariffs. It is predicted that the FDI to UK will fall by 29 per cent. Brexit referendum has already caused a fall in immigration from the EU countries to UK and this is seriously affecting sectors like construction, fruit industry, nursing and hospitality sector which heavily depend on the EU workers. It is important to note that contrary to popular belief, immigrants pay way more in taxes than they receive in social welfare.
The wave of populism that has gripped Europe, especially Britain after the Brexit campaign has polarized British society, increased xenophobia and anti-immigrant narrative among the low income earners and less educated masses. This has further put a pressure on the conservative government to reduce immigration to 100,000 people per year as promised during the election campaign. Theresa May is all set to fulfill that promise and immigration is now being restricted to only skilled workers. This will also further restrict immigrants from entering UK legally and they may resort to illegal means.
Pakistan and UK have strong bilateral ties and UK has supported Pakistan on numerous issues in the European Parliament such as in attaining GSP plus status and on Kashmir issue. With Britain leaving the EU, Pakistan would lose one of its strongest allies in the European Union. Hence, there’s a need to build strong ties and enhance lobbying efforts with other countries in the EU parliament, especially France, Germany and Italy who could then look after Pakistan’s interests.
However, UK is now trying to enhance its economic ties with commonwealth countries. This is a great opportunity for Pakistan which it needs to exploit and ensure that Pakistan exports get favorable trade conditions and access to UK markers (as already promised by UK representatives on numerous occasions). Pakistani Diaspora can also play an important role in facilitating and bringing UK investors to Pakistan.
So far, the EU is not willing to renegotiate the withdrawal agreement (Brexit deal) with UK that was agreed upon in November 2018. In the case of a No-deal scenario, UK will have to follow trade laws and rules set by World Trade Organisation (WTO) once it leaves the EU in March 2019, which means that UK will have to pay the same tariffs that non-EU member countries pay. This would seriously impact trade between the two parties; increasing the prices of UKgoods entering the EU markets. Hence, this would mean that there will be a hard border between Northern Ireland and the Republic of Ireland. While on the other hand the Irish government has adopted a very strong stance on the issue of Irish border and has made it very clear that it will not accept a hard border. Therefore, in this scenario, the best choice for Britain would be to ask the EU for more time till May is successful in getting a withdrawal deal approved by the British MPs.
[1] Heather Stewart, “May suffers heaviest parliamentary defeat of a British PM in the democratic era,” Guardian, January 16, 2019, https://www.theguardian.com/politics/2019/jan/15/theresa-may-loses-brexit-deal-vote-by-majority-of-230.
[2] Steve George, “Brexit basics: Key points from the draft deal,” CNN, November 16, 2008, https://edition.cnn.com/2018/11/15/uk/brexit-deal-key-policy-takeaways-intl-gbr/index.html.
[3] https://www.economist.com/leaders/2019/01/17/brexit-mother-of-all-messes
[4] Jon Henley, “What is going on in Brexit – and what might happen next?” Guardian, January 11, 2019, https://www.theguardian.com/politics/2019/jan/11/what-is-going-on-in-brexit-and-what-might-happen-next.
[5] Alex Hunt and Brian Wheeler, “Brexit: All you need to know about the UK leaving the EU,” BBC News, January 8, 2019, https://www.bbc.com/news/uk-politics-32810887.
[6] Lisa O’Carroll, “No-deal Brexit would put thousands of UK jobs at risk, CBI to warn,” Guardian, January 10, 2019, https://www.theguardian.com/politics/2019/jan/10/no-deal-brexit-shrink-uk-gdp-risk-jobs-cbi-business-warning.
[7] Ibid.
The writer is research associate at ISSI
Edited by Najam Rafique
