What can Theresa May do next?

Following the defeat of Theresa May’s Brexit deal in the House of Commons this week, the Prime Minister will publish her new plan on EU withdrawal to Parliament on Monday, 21 January, with a full debate and the key vote on it scheduled for Tuesday, 29 January.

Here, Douglas Webber, professor of political science at INSEAD, and Antonio Fatas, professor of economics at INSEAD, lay out what they are planning next.

What can Theresa May do next?

Douglas: “Theresa May has one card she still might be able to play against the hardline Brexiteers in her party and that would be to threaten to legislate in favour of a second referendum. She now has until Monday to present a new plan to MPs. There is, however, a high risk that this move would provoke a lasting split in the Conservative Party – something which May has so far been at great pains to avoid.

And, to work, it would also have to provoke a split in the Labour Party, which has so far tried to exploit the conflict over Brexit to bring down May and her government rather than take a clear stance against Brexit. The EU could probably be persuaded to re-negotiate aspects of the failed deal so that it would look more like the kind of relationship that Norway has with the EU. However, a revised deal of this kind would meet with the same objections from hard-line Brexiteers among Conservative MPs as the one defeated.

In the end they may have to choose whether to compromise with May and endorse a deal which falls far short of what they really want or risk the formation of a cross-party parliamentary coalition that asks the EU to extend Article 50 while a second referendum is organised that could reverse the result of the first. It is only when they are staring defeat in the eyes that they are likely to make any such compromise. They will not be shifted by the prospect of a ‘no-deal Brexit’, no matter how negative the consequences of this outcome may look.”

Could Brexit be delayed?

Douglas: “May could either revoke article 50 which means Britain stays in the EU or ask the other member states for an extension of the date of the withdrawal of the UK. I consider the latter possibility quite realistic. Delaying Brexit would give all sides more time to avoid a no-deal Brexit or prepare for a no-deal Brexit. But I don’t think it is feasible for Britain to revoke article 50 given the result of the first referendum.”

Would “remain” win a second referendum?

Douglas: “It seems that the argument for remaining in the EU has gained ground since the Brexit referendum now that the awareness of some of the costs and consequences of Brexit have become clearer. But it would be very difficult to guess the outcome. While some leave voters might have shifted to the remain camp, many voters on both sides may reject the idea of a second referendum because the people have already spoken and the matter should be laid to rest. If there is a second referendum, I think it is safe to say it will be very close again.”

Do you see the possibility of other EU member states leaving the bloc in the short term?

Douglas: “I don’t see any likelihood in the very short term of other member states deciding to leave the EU. They’re all looking at the UK right now and what’s taken place with Brexit over the course of the last two and a half years years is certainly a glaring example of how hard it will be. What I think might be more likely are member states getting restless over issues such as the Eurozone and the Schengen area of borderless travel. One country of particular concern is Italy, which has fared worse economically since the Euro was launched and along with Greece is most exposed to the refugee crisis given its geographical location on the Mediterranean Sea.”

What do you think is the best case scenario and will Theresa May survive?  Is there likely to be a second referendum? 

Antonio: “In my opinion, the hard Brexit option, no deal option, is off the table at this stage. The EU will need to approve a delay and it is the best option right now. And there are many ways to do that. It is likely that the UK and the EU are going to work towards an extension of Article 50 and head back to the negotiating table, otherwise, there is no time for Theresa May to renegotiate between the UK and the European Union. The Europeans have a lot of power in this negotiation. They are going to tell her to go back home and figure out a deal, otherwise, they will not renegotiate. Theresa May will have to negotiate within the UK and to present a new proposal to the EU. It could be that a second referendum is the best way out for these people to find a compromise.” 

When could a second referendum take place? According to UK law, 10 weeks is required, and before that, parliamentary approval is required. Which all brings the scenario of a second referendum closer to the European Parliamentary elections in May, so is it really feasible?

Antonio: “It is likely that the UK and the EU are going to have to muddle through a few deadlines, like the European Parliament vote. As history has shown, the European Union is pretty good at that. When trying to avert a big crisis, which is pretty much what they are doing right now, they will always find ways to go around it – to find some sort of compromise and buy themselves time.

“They might go beyond that deadline of the European Parliament vote, and at some point, the UK may finally find a way out of this by finding something that they all agree to. However, if there is going to be a second referendum, the ‘leave’ voters will believe it’s a betrayal of democracy. I personally disagree with that statement but that’s how they will feel about it. So, they are going to have almost half of the country constantly thinking that it is a betrayal of what they have already voted for.”