Brexit Update 26/07/2019

By August 10, 2019 Brexit Updates

Top 3 developments

  • Boris Johnson wins Conservative leadership campaign and becomes Prime Minister
  • Michel Barnier calls Boris Johnson’s Brexit plan ‘unacceptable’
  • Jo Swinson elected as the new leader of the Liberal Democrats

Leadership Contest

Landslide into the PM

Boris Johnson won the Conservative leadership campaign with a landslide on Tuesday, gaining 92,153 votes from Conservative Party members, which was a whopping 66.4% of the vote. While not quite as large a majority as David Cameron received from Party members in 2005 (who got 67.6%), it was no doubt a convincing – if unsurprising – win for Boris. In becoming the leader of the Conservative Party, Boris Johnson was therefore made the new Prime Minister of Great Britain and Northern Ireland.

On Wednesday, Boris made his way to Buckingham Palace and asked the Queen to form a Government. From there he travelled to Number 10 and made his inaugural Prime Ministerial speech outside the door he has spent years dreaming of living behind. This first speech is a great opportunity to shape the direction of a Premiership and to outline their policy agenda. But it can also come back to haunt Prime Ministers, as Theresa May found out with her commitment to tackle the ‘burning injustices’ facing society.

Boris’ speech was wide-ranging in its policy commitments, but his rhetoric was strongest in his commitment to leave the EU on the 31st October, with ‘no ifs’ and ‘no buts’. Interestingly he also outlined that ‘the buck stops with me’, which in theory suggests that he will take personal responsibility if the UK does not leave by the 31st October. Taking personal responsibility in this capacity usually means putting your job on the line for it, but considering how hard he has worked to attain this goal, it seems odd that he would take such a big gamble on achieving Brexit by this time. However, he knows better than anyone that his Premiership already depends on achieving this, and if he fails to deliver Brexit he will be obliterated in any future General Election by the Brexit Party. An optimistic first speech, but as he himself said, it’s time to get to work now to make this vision a reality.

Everyday I’m reshuffling

As soon as Boris was given the keys to Number 10, he took to the task of choosing his Cabinet. But instead of choosing a Cabinet which would unite the already fractured Party, he chose individuals who he thought could implement his vision and objectives, and his reshuffle ended up seeing 17 former Cabinet members sent to the backbenches. Some, such as Philip Hammond and David Gauke, jumped before they were pushed, but there were still some demotions that raised eyebrows. Perhaps most controversially, Jeremy Hunt, his leadership campaign rival, refused the offer of Defence Secretary and was sent packing. Although voted by 46,646 Conservative Party members to be the next Prime Minister, Jeremy Hunt saw his 9-year stint in the Cabinet ended on Wednesday.

There was a new influx into the great offices of state, with Priti Patel, Dominic Raab and Sajid Javid being made Home Secretary, Foreign Secretary and Chancellor, respectively. Priti’s rise can be seen as meteoric, as she hasn’t been in the Cabinet since December 2017, when she was sacked as International Development Secretary for holding secret meetings with senior Israeli officials. However, she voted against Theresa May’s withdrawal agreement on all three occasions, so she can be seen as a True Believer of Brexit. Equally, Dominic Raab was a surprise choice for Foreign Secretary, considering just one year ago he was the Housing Minister. But again, his Brexit credentials are stellar and this move, especially his position as First Secretary of State – which places him as the most senior Cabinet member after the PM – will placate the hard Brexit wing of the party who see his vision of Brexit as ideologically pure.

Sajid’s promotion is not a surprising one, but he is the only senior Cabinet Minister who is a Remainer. But, during the leadership campaign he made all the right noises about respecting the referendum result and leaving by the 31st October, and he has been trusted to lead the Department which has been viewed suspiciously by Brexiteers as one that is fundamentally opposed to Brexit, so he has a big task ahead of him to overhaul this perception. These Cabinet positions, as well as the various roles in Number 10 that have been filled by key members of the Vote Leave Campaign – including controversial Campaign Director Dominic Cummings – shows that this is a Government now led by Brexiteers. There is no longer any space to blame a Remainer conspiracy for preventing Brexit from happening, as the Brexiteers are very much in charge, and they will have to own whatever outcome happens now.

UK Update

No-deal Brexit can (IM)F off

The IMF published its World Economic Outlook on Tuesday and forecasted slightly more pessimistic global growth figures due to the potential for a range of economically destabilising events, including a no-deal Brexit. The IMF forecasted 2019 global growth at 3.2%, which is the weakest rate of expansion for a decade, and attributed a no-deal Brexit as one of the main events that could throw the global economy off-course. The rhetoric of Boris Johnson has led the IMF to believe that this is an increasingly plausible outcome, and this can be seen as a confirmation that, contrary to what some Brexiteers like to claim, the consensus is that a no-deal Brexit would be damaging to both the domestic and global economy.

A no-deal Brexit was not the only thing highlighted as detrimental to global growth, as the US trade war with China was listed as a more pressing concern, and issues facing the economies of Argentina and Turkey were also noted. Of course, it is difficult to make a convincing argument to the general public about why maintaining global growth is important, especially as it is almost impossible to see any tangible, short-term benefits. But considering Boris has pledged for the UK to be an outward looking, Global nation, it would not be a good first step for his first few months in office to destabilise global economic growth.

On a Swin(son) and a Prayer

Boris Johnson was not the only person elected as the leader of a political party this week, as on Monday Jo Swinson was confirmed as the first female leader of the Liberal Democrats. The Lib Dems have found themselves back in the political mainstream following the European Parliamentary elections, and they are in place to be a serious contender in a future General Election as they will strip votes from both Tory and Labour moderates as those Parties veer to the extremes of the right and left respectively. This means that they should not be ignored, and what their leader says really matters.

It was therefore surprising that Jo Swinson announced that even if there was a Second Referendum and the outcome was again in favour of Leave, then the Lib Dems would still not respect the result. Her reasoning for this is that she believes the Lib Dems have been given a manifesto to oppose Brexit at all costs. While an admirable position, it could prove detrimental to their goal of a second referendum on the vote. For any Brexiteer or Remainer that was compelled to honour the first referendum result, this would ring alarm bells in their heads.

If you war game this mindset, it would lead to a number of deeply troubling scenarios. For if the Lib Dems do not honour the result of the Second Referendum result if they lose, then what would stop them campaigning for a third referendum, or as many referendums as necessary until they got the result they wanted? Equally, if the opposing logic were used, this would cause an even greater problem, because if the Lib Dems do not plan to honour the result of a second referendum, then what would stop the Conservatives from not honouring the result if the country chose to Remain? What is the difference between those two positions? In short, Jo Swinson’s position would lead the UK’s political future into deeply unfamiliar and uncomfortable territory, and the unintended consequences of such political martyrdom could lead to a full-blown political crisis if it materialises.

EU Update

A chink in the armour?

The EU reaction to Boris Johnson’s appointment as Prime Minister was predictably diplomatic. But behind closed doors, there is no doubt that he is the candidate they did not want on the other side of the table for the upcoming Brexit negotiations. In his first address to Parliament as Prime Minister on Thursday, Boris outlined that he wanted the backstop removed entirely from the existing Withdrawal Agreement. Not just tweaked, but removed. This means that measures such as introducing a sunset clause on the backstop or a unilateral exit mechanism would not suffice. This was a big shift in position from the consensus Governmental stance on this issue, and this red meat for the Brexiteers has not come from the backbenches, but now from the highest echelon of Government.

Unsurprisingly, this did not go down well in Brussels. EU Chief Negotiator Michel Barnier said that this proposal was ‘unacceptable’ and urged EU leaders to show unity in opposing his demands. It will be interesting to see how these leaders react, as up until now they have held their collective position. But will Boris’ plans to ‘turbocharge’ preparations for no-deal and his Cabinet of passionate Brexiteers make someone crack?

There has already been talk this week of EU leaders fearing a ‘Brexit Cold War’ if the UK leaves without a deal. There are concerns that such an exit would create an air of hostility between the UK and key EU nations. Countries such as France and Germany have ties to the UK that go far beyond the EU, as the UK are a key ally for defence and intelligence and they will have to routinely deal with the UK in the context of NATO, the UN and other supranational bodies. In essence, EU leaders have to think about more than just the EU, so this provides a chink in the armour for the UK to aim at. If just one nation cracks under the pressure of a no-deal, especially if it’s Ireland, then the EU’s position will come crashing down. This is no doubt a risky move from the UK, but it might just be the only thing that will make the EU concede its position.

Upcoming Key Dates

  • 3rd September: House of Commons back from Summer Recess
  • 17th October: EU October Summit
  • 31st October: Current Brexit Deadline.

 

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