Bill Diviney, senior economist at ABN AMRO, points out that UK Prime Minister Theresa May presented her ‘Plan B’ Brexit proposal and after having given up on cross-party solutions to the parliamentary deadlock over Brexit, her latest move is aimed at bringing the right flank of her party on board.
“We believe this approach will fail, for two reasons. Firstly, Ireland has flat-out rejected any renegotiation of the backstop. Secondly, even if a renegotiation on this point were somehow successful, it is unlikely the entire Conservative Party would back the deal, nor (potentially) the DUP. Given the government’s slender majority, the risk that it does not pass looks high.”
“While the Prime Minister expressed scepticism over a referendum in her statement, she did not rule it out either. Much will hinge on whether the Labour Party officially comes out in favour of a second referendum in the coming days, now that the chances of the alternative – a cross-party consensus for a soft Brexit – have fallen.”
“Should Labour’s position shift, the next step would be the party voting in favour of a Referendum amendment to May’s Plan B motion on 29 January. While the vote could be a close one, this would send a strong signal to the Prime Minister on the strength of support for a referendum.”