Just when we thought the Brexit saga was about to come to a close, MPs rejected Prime Minister Theresa May’s withdrawal agreement earlier this week for a second time. Given the outcome, the British government held a vote on whether or not the EU should accept a no-deal scenario, which was subsequently rejected as well.
With her back to the wall, May set up a third vote asking if the UK should request an extension, something most conservatives were against. With a 211 majority, MPs voted to request that delayed departure, meaning that the UK may not leave on the infamous date of March 29, now mere weeks away.
Leadership has claimed that Brexit could be potentially pushed back three months to the end of June, assuming the 27 other member states agree to extend Article 50 – the mechanism for removing the UK. May wants to hold another vote on the withdrawal agreement next week. If she garners enough support, she will request the June delay (meaning that the UK will oddly enough be voting in the European elections in May). If not, she will likely pursue a longer one.
Though doable, politically it is now almost impossible that the UK will leave the EU by the planned March 29 date. May, and many conservatives, have warned that delaying their exit or refusing a no-deal do not solve the problems at hand and are instead forms of procrastination.
What’s next for the UK?
When requesting a delay, the EU will demand a reasonable answer (“credible justification”) for why it is needed. Now, May must determine what she will tell them, hence the need for further clarity and voting. Technically, March 29 is a legally binding date. Changing it will require unanimous support. Many in the EU are open to a longer wait time if it gives the UK a chance to rethink its Brexit strategy and come up with a safe, supported deal.
In the meantime, British businesses and administrations are preparing for a no-deal Brexit, which months ago seemed unfathomable. Michel Barnier, EU Chief Brexit Negotiator, iterated that the EU is focused on preparing for that possibility too, stating that now, the outcome is fully in the UK’s hands.
On Monday, to try to garner support for the impending vote on her withdrawal agreement, May met for talks with Jean-Claude Juncker and Barnier to gain more clarity on the Irish backstop, still the deal’s biggest source of contention.
She returned with legally binding instrument that would allow the UK to launch a dispute against the EU if it attempted to trap the UK in the backstop indefinitely; a joint commitment to replace the backstop by the end of 2020; and a declaration claiming that the UK can leave the backstop if the future EU relationship and any prospect of agreement falls apart.
But still…it was not enough to sway MPs.
For its part, Luxembourg is preparing for a no-deal scenario at the end of this month.
Lawmakers are discussing a bill that would see British medical and architectural credentials automatically recognized in Luxembourg after March 29.
Teachers at EU schools were the first to feel the brunt of a potential no-deal. Many such EU institution jobs are awarded to member states in line with national quotas, a privilege the UK could soon lose.
Financial technology startups have been coming to Luxembourg to ensure a presence on the continent, often maintaining their offices in London.
In the headlines this week, it was announced that Britain’s largest insurance provider, Prudential, moved 37 billion pounds to Luxembourg ahead of March 29. It is estimated that 1 trillion pounds of assets have been strategically transferred out of the UK due to Brexit. The company also announced that it had already spent 27 million pounds preparing for Brexit, e.g. setting up an office in Luxembourg.
Share your goals with us & ask how we can help you get there. Questions about trends, regulations & requirements? Curious about Luxembourg? Fiduciary Tucci & Partners can help answer your queries & find solutions.