Toss a coin if you want more certainty, says Ian Taylor
The end is nigh on Brexit or, rather, the end of the beginning.
So expect rampant speculation – warnings, threats, claims and counter claims – in the run-up to an EU summit next week.
Fears in the industry loomed large this week as UK travel association Abta hosted its annual Travel Convention in Seville.
Javier Pinanes, director of the Spanish tourist office in London, revealed the underlying fears in the EU’s biggest destination in an interview with the Press Association at the Convention.
Pinanes, perhaps inadvertently, highlighted the reason Britain will not simply crash out of the EU with no arrangements in place to maintain the most basic infrastructure and connectivity.
He suggested a no-deal Brexit would be “a really big problem”.
Pinanes said: “It would be a very big impact. If there are no flights, if we have visas, if we have problems with health insurance . . . people will probably not travel to Spain or other countries in the EU.
“For Spain, it is decisive. The UK is our main market. We received 19 million British people [in 2017].
“We have lots of connectivity between the most important cities in the UK and the most important cities and destinations in Spain. It would be a disaster.”
UK industry leaders at the Convention took a rather more sanguine view.
Saga Travel chief executive Robin Shaw suggested: “the cost of not doing a deal on both sides is too great.”
Dnata Travel Europe chief executive John Bevan argued: “The [UK] government has to get a deal.”
EasyJet chief executive Johan Lundgren insisted: “It is inconceivable that politicians on both sides would put us in that position [of no deal].”
There are understandable concerns about the impact on UK outbound bookings if uncertainty about the outcome of Brexit continue beyond the end of the year.
Alistair Rowland, Abta board member and group general manager for specialist retail at The Midcounties Cooperative, noted: “If there is no deal this side of Christmas, January will be tough.”
Undoubtedly it will. But, as yet, outbound bookings for the post-March 2019 period are remarkably strong – up 17% year on year according to industry analyst GfK.
A deal is close
Reports at the end of this week suggested a Brexit deal is close which would see the whole of the UK remain in a temporary customs union for an unspecified period.
That would enrage Tory Brexiteers. Two Cabinet ministers were reported to be ready to quit after being briefed on the details by prime minister Theresa May.
May must keep the Northern Irish Loyalist party, the DUP, onside or she will fall. That means maintaining an open border between North and South in Ireland and no separation of Northern Ireland from Britain.
Keeping the UK in a customs union squares that circle.
But the bigger problem for May is not getting a deal with Brussels – that is achievable – it is getting whatever is agreed with the EU through the UK Parliament.
Enough Tory MPs will vote against such a deal to bring May down without support from the Labour opposition, whose leadership is pledged to oppose whatever deal May presents.
However, there were suggestions this week that enough Labour MPs might side with the government, persuaded to support a deal by appeals to ‘the national interest’.
The numbers reported – at least 30 – could counter balance the number of Tory MPs who will oppose any deal keeping Britain in a customs union with the EU.
The latest claim is that 40 Tory MPs will vote against the government.
May commands an overall majority only with the support of the nine DUP MPs, remember. So Labour votes will be vital to the government.
The Parliamentary arithmetic is in flux but may settle broadly in balance. The Prime Minister might squeak through.
But May believed she had 80% of a Brexit deal in place with her ‘Chequers Plan’ ahead of the Strasbourg summit with EU leaders last month.
She was humiliated when European Council president Donald Tusk announced: “Chequers will not work.”
All focus will now be on next week and the EU leaders’ dinner on October 17 and summit on October 18. The messages which emanate from these will set the mood going into November.
A further summit is likely in mid-November, perhaps to ink an agreement, with May expected to attempt to win UK MPs’ backing in early December.
Clarity at last?
So, in two months we may finally have clarity at least on the first phases of Brexit itself.
Expect the pound to strengthen if a deal is announced, only for its value to be trashed if MPs throw out the agreement.
If May wins Parliamentary backing, the pound should recover something like its former strength.
A deal would mean a ‘soft’ exit with arrangements between the UK and EU largely remaining as now for a period, possibly beyond the transition phase already agreed.
But this would be at the expense of civil war in both main parties as Labour Party members turn on MPs who balked at bringing down the government and Tory Brexit-supporters turn on May and her backers.
If May fails to win Parliament’s backing, expect a general election to be called in early 2019.
May does not need to call an election and will give every sign of not intending to do so until it becomes almost inevitable. But an election may present the only way to move forward.
This would mean weeks of political turmoil – months if she dithers – ending very possibly in a Corbyn-led Labour government, which would trigger a fresh plunge in the pound and more turmoil.
At this stage, I would guess the odds on Parliament backing May’s Brexit deal as 50/50 and put similar odds on May or her most-likely successor as Tory leader, home secretary Sajid Javid, winning an election.
In effect, the way ahead could depend on two tosses of a coin.