This week, the UK parliament voted that it will take over
the Brexit period. This was a blow for Theresa May, who was hoping to force the
MPs vote for her deal before the Friday’s deadline. It now appears that the
country will remain in the European Union for a longer period as the MPs find a
way forward. This will be possible because they have already voted to allow for
an extension of the March 29 deadline. Starting from today, the members will
start looking at a number of options.
Another Referendum
There are many members in the left who believe that the
country should go to another referendum. The questions for this referendum
would be similar to those of the other referendum but they would also have
Theresa May’s deal. Labor leader, Jeremy Corbyn has expressed support for such
a deal but it is not likely to pass. This is because many MPs lose credibility
if they vote for another referendum.
Revoke Article 50
Another option that will be deliberated is on whether to
revoke Article 50. The idea is to present Theresa May’s deal to the MPs and if
they oppose it, revoke Article 50. This too will likely not happen because of
the Eurosceptic members in parliament. Indeed, yesterday, Jacob Mogg, who is
one of the most Eurosceptic MPs said that he could vote for Theresa May’s deal.
He argued that he is now presented with two options: vote for her deal or have
no Brexit at all.
Customs Union
This option allows the UK to leave the EU without a deal but
move swiftly to negotiate a new customs union deal. The customs union will help
improve continuity with the way UK does business with the European Union.
Common Market 2.0
In this option, the UK will remain in the single market with
the EU. It will do this by rejoining the European Free Trade Association (EFTA)
and staying in the European Economic Area (EEA). To replace the Irish backstop,
there will be a comprehensive customs partnership, that will allow a continued
freedom of movement. The challenge with this is that it leaves the UK
answerable to European courts. In the negotiations, the MPs want to make this
enforceable using UK’s courts.
Malthouse Compromise
This is a compromise brought forward by Kit Malthouse. The
goal is to pass Theresa May’s deal, without the contentious issues on backstop.
Afterwards, the backstop will be replaced by other measures.
In anticipation of the deliberations in parliament, the
sterling has been relatively unmoved. This is because no one knows exactly what
will happen. In the yearly chart below, the pair is close to the 50% Fibonacci
Retracement level. In case of a deal, the pair could reach a high of 1.4000.
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