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Brexit: five possible scenarios for UK after shock election result

Posted by hkarner - 9. Juni 2017

Theresa May’s ‘no deal is better than a bad deal’ strategy may now be in tatters, but what might replace it?

The election has raised hopes of a dramatic change in Britain’s approach to Brexit. But whatever happens next, the country remains boxed in by some hard legal, political and commercial realities. Here, in descending order of likelihood, are five possible scenarios:

1. A consensual but hard Brexit

Theresa May’s stated strategy of walking into Brexit talks and threatening to walk out again if she does not like what she hears is in tatters. Though the economic costs of crashing out without a deal were always hard to contemplate, it is now clear there is no political support for such a high-stakes gamble. Whoever goes into the talks – which are due to start in 10 days’ time – will no longer be believed if they hold a gun to the country’s head and threaten to pull the trigger.

Instead, at the very least, Britain’s Brexit negotiators are likely to have to take a more consensual approach advocated by Labour and some Tory MPs. The UK government may still push for a comprehensive free trade deal and immigration control, but it is now likely to have concede from the outset that these are in tension and be prepared to bend accordingly. Whether this means perhaps accepting a higher divorce bill, or unilateral concessions on citizens’ rights, remains to be seen, but crashing out without any deal at all appears much less likely now.

2. A softer Brexit

Many will look at Theresa May’s drubbing on Thursday and demand more change over Brexit. There was an 8% swing from Conservatives to Labour in constituencies that voted to remain in last year’s referendum, suggesting her uncompromising stance played a big part in the government’s downfall. But Labour also limited the scale of its losses to the Tories in leave-voting constituencies to just 1% by playing a clever game of fudging its Brexit position. The Liberal Democrats’ loss of seats such as Sheffield Hallam also suggests there is little support in the north for backtracking entirely over Brexit.

If Labour hopes to shift the country’s negotiating stance it needs to tread very carefully, especially if another general election lurks around the corner. One option might be to try to find a way to remain in the single market, with tweaks to EU freedom of movement rules rather than wholesale new immigration controls. This was attempted by David Cameron before the referendum, but British negotiators would be in a much stronger position now to try again.

3. Chaos and car-crash Brexit

It should not be forgotten, however, just how bleak Britain’s options look right now. The EU is united with a clear and ambitious negotiating strategy. Britain has started the two-year clock ticking by invoking article 50 but has precious little idea what it wants, let alone how to achieve it.

EU leaders have hinted they would be willing to delay the start of talks, but are much less likely to shift the end date. If we want to abandon Brexit entirely at this stage it would probably require unanimous agreement by all 27 other member states, which puts them in a very strong legal position.

It is possible that other nations may choose this moment to turn the screws instead. By insisting on a high divorce bill and no hint of trade concessions unless Britain gives up its hopes of restoring sovereignty, the EU could easily leave Theresa May, or any British prime minister, with the same hard choice between no deal and and a bad deal. Throw in the added complexity of a much weaker negotiating mandate and agitation from Brexiters on the right of the Tory party, and there remains a serious risk of both chaos and a car-crash Brexit now ensuing.

4. EFTA membership

A less likely option, but one that may still prove commercially necessary, is for Britain to try to stay clearly within the existing single market. In practical terms this would mean joining the European Free Trade Association, like Norway and Switzerland, and seeking to remain in the European Economic Area as a result.

The political costs of this are high. As Switzerland has found, this is not compatible with an independent immigration policy. It also requires accepting rules set by other EU members and the jurisdiction of the European court of justice – both of which have been clear red lines for the Conservative party.

If there is no political consensus in Britain for how to proceed over Brexit, this is perhaps the lowest common denominator. At the very least it could serve as the basis of a transition arrangement.

5. A second referendum

With so many unpalatable choices ahead, there is still a considerable chance the British electorate will signal its desire for a more fundamental rethink of Brexit. The most likely vehicle for this would be a second referendum held at the end of the negotiating phase. If British negotiators come back from Brussels without a comprehensive free trade deal, or a highly watered down Brexit, it is quite possible the new parliament would have to put this to the country.

Another possible route to this dream scenario for remainers could theoretically come through further electoral upheaval in a second general election. However, it is hard to imagine either of the two main parties standing on a platform of reversing Brexit entirely, given the extreme fragility of their voting coalitions.

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