Odds of Hard Brexit Increase as UK Foreign Secretary Boris Johnson Resigns
Contrary to what many believe, the odds of a hard Brexit jumped this morning when Boris Johnson Quit as U.K. Foreign Secretary Amid Brexit Turmoil.
U.K. Prime Minister Theresa May was battling Monday to overcome her biggest crisis since she lost her parliamentary majority in last year’s general election after Foreign Secretary Boris Johnson became the second prominent supporter of Britain’s departure from the European Union to quit her government in less than 24 hours.
Mr. Johnson is a longtime figurehead for the fervently anti-EU wing of the ruling Conservative Party and his departure increases the chance that Mrs. May could face a formal challenge to her leadership.
The resignations of Mr. Johnson and Mr. Davis increase the chances of a leadership challenge to Mrs. May from lawmakers in her Conservative Party unhappy with her plan to keep the U.K. economy closely tied to the EU after Brexit. Steve Baker, a Brexit supporter who was serving as a junior minister in Mr. Davis’s department, also quit.
Forty-eight Conservative members of Parliament must back a call for a vote of confidence in Mrs. May for one to take place among party lawmakers. There are at least that many pro-Brexit lawmakers among the 316 Conservatives in the House of Commons to make that happen.
Theresa May will replace Johnson and Davis with people willing to support her view.
So, on the surface, it may appear this will soon blow over.
It won't. Odds of a leadership challenge just rose dramatically and there is no reason to believe the EU will accept May's proposal in the first place.
Eurointelligence had some interesting comments last evening before Boris Johnson resigned.
The resignation of David Davis as Brexit secretary is an important watermark in the Brexit process, and might open a number of pathways from here onwards - everything from full membership of the single market to a hard Brexit (no, not a reversal). If the man formally in charge of the Brexit negotiations no longer has confidence in the process, it clearly raises questions about the viability of Theresa May's facilitated customs arrangement. She forced the plan down the collective throat of her cabinet at the Chequers meeting on Friday. It is a warmed-up version of what she had already proposed, with added technical detail. Boris Johnson called it: polishing a turd.
The big question is: will Johnson go as well, a decision that would no doubt open a leadership contest? The FT suggested that he would stay, despite his unhappiness with the plan. [oops]
There is logic to a leadership contest. Jacob Rees Mogg, the chairman of the European Research Group, a caucus of 60 hard-Brexit Tory MPs, said in a newspaper article this morning that he will vote against May's proposal. So will, of course, Davis. The Labour Party also said it would not support it. In other words, there is no majority for it in the House of Commons. [No one is happy with May's plan, not even those who favor staying in the EU.]
The EU is likely to meet May's offer of a good-only customs union with scepticism. Even if it agrees to negotiate on the basis of it, the UK would have to make further concessions, especially on immigration and the supremacy of the European Court of Justice. Davis made that point in his letter - and he is right about that. May's proposal is at best the start of a conversation. The agreement that will come out at the end of that conversation will, without a doubt, be very similar - or inferior - to the Norway model.
There are at present no positive parliamentary majorities for any proposal: no majority for leaving the single market, nor for staying in it. There are blocking majorities for everything, and constructive majorities for nothing.
The same degree of indecision is also reflected in opinion polls. A snap poll over the weekend suggested that 61% reject the proposed deal, with only 31% in favour. The only option that does not require any majorities is the no-deal option. If the government cannot agree a deal, then parliament will not be asked to ratify it.
While Davis and the eurosceptics are not in a position to force their version of Brexit, they have two strategic options at their disposal. They can let the agreement fail, and bet on a no-deal Brexit.
There are increasing risks on the Tories as well. It is not clear they would win a new election.
There is also a rising risk the EU, instead of taking advantage of this setup and bending a little, instead asks for more concessions.
Theresa May will at some point say, "enough is enough, I tried."
Add it all up and there is a huge push towards the cliff, simply because it is the default option.
Unless there is agreement, hard brexit happens.
Mike "Mish" Shedlock