Analysis

Brexit deadlock to continue, political instability to increase

  • Europe
  • United Kingdom
Four take-aways from the current state of affairs in Brexit fixated Britain


Prime Minister Theresa May has officially submitted her resignation, standing down on 7 June as Conservative Party leader and, consequently, as prime minister. We see four main take-aways from the current situation:

  • May is likely to be replaced by someone with a more hardline stance on Brexit, and her resignation increases the likelihood of the government pursuing leaving the EU without a deal in October.

  • However, May’s successor is unlikely to be able to unite the Conservative Party and is likely to have an even weaker position in parliament, meaning continued deadlock over Brexit is likely.

  • A change of leader also increases the likelihood of the Conservative government being ousted in a confidence vote, and in turn of a Labour-led government taking office.

  • The business environment will remain broadly stable despite the political instability, but uncertainty over the Brexit process will continue to hinder companies’ planning.


The writing was on every wall

May had faced calls to resign for months but survived a confidence vote among Conservative MPs in December 2018 and in parliament in January. With support for her Brexit strategy falling further, she committed to standing down and said that she would do so after a vote could be held on the Brexit withdrawal agreement bill. This plan prompted widespread anger among Conservative MPs and, behind the scenes, cabinet members and other senior figures appear to have convinced May that it was likely to fail and that she must step down.

May will stay on as interim prime minister until the Conservative Party concludes the process to select her successor, likely in late June or early July. MPs will vote in a series of rounds until two contenders remain. Conservative Party members will then choose between those two in a vote.


Still deadlock

Despite May’s call for compromise in her resignation speech, divisions within the Conservative Party and parliament over Brexit are likely to deepen in the coming months under a new leader. All of the most likely contenders favour a harder line on Brexit than May. Former foreign secretary Boris Johnson is currently the frontrunner. However, leadership elections often throw up surprises and May’s successor may well be someone with a lower profile, such as Health Secretary Matt Hancock.

Regardless of who succeeds May, the parliamentary arithmetic that has led to deadlock over the Brexit process will remain a problem for the new prime minister. A new Conservative leader will still be without an outright majority in parliament and may lose more MPs if a hardliner alienates moderates into leaving the party.


Uncertain future

The options open to May’s successor are limited. Should a more centrist figure, such as Foreign Secretary Jeremy Hunt or Home Secretary (interior minister) Sajid Javid, become leader, they would be likely to continue to seek to pass a deal through parliament, likely with limited success. A hardliner such as Johnson or former Brexit secretary Dominic Raab would likely demand major concessions from the EU and, when these are not forthcoming, threaten to leave without a deal. With parliament likely to remain opposed to a no-deal Brexit, MPs would likely seek to block this and could bring down the government.

In any scenario, uncertainty will be prolonged. Businesses in the UK face at least several more months without clarity over the UK’s future relationship with the EU.

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