Hello and welcome to City A.M.’s Brexit live blog for the second of potentially three huge votes on the UK’s departure from the EU.
Prime Minister Theresa May was defeated in the House of Commons in a second vote on her Brexit deal last night, losing by 391 votes to 242.
MPs were not persuaded that May’s changes would prevent the UK from being tied indefinitely to an EU customs union after Brexit, following the attorney general’s admission that his legal advice was unchanged.
Now a vote on whether to reject a no-deal Brexit will occur tonight, ahead of the UK’s scheduled departure on 29 March. If MPs do reject it, the UK could still crash out without a deal at the end of March.
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3.40pm: Gove says no-deal Brexit option must remain on the table
Ardent Brexiter Michael Gove has committed to keeping the threat of a no-deal Brexit dangling over the EU in the hopes it will lead to an improved withdrawal agreement.
Tonight MPs vote on whether the UK should leave the EU without a deal on 29 March, its scheduled departure date, but whichever way the vote goes the UK is set to exit the bloc at the end of this month.
Tory MP Edward Leigh asked in parliament for Gove to confirm that the government will not completely remove the most drastic option from the negotiating table, adding: “Otherwise how will we get a better deal?”
Gove responded by saying that while he will vote against a no-deal, the only way to prevent such an outcome is by either reversing Article 50 or voting for a withdrawal agreement.
1.20pm: Spring Statement overshadowed by Brexit
Chancellor Philip Hammond has delivered his Spring Statement, but warned from the start that his predictions are overshadowed by ongoing Brexit uncertainty.
The Office for Budget Responsibility (OBR) has downgraded the UK’s growth in 2019 from 1.6 per cent to 1.2 per cent.
“Leaving with no deal would mean significant disruption,” Hammond warned, “and a smaller and less prosperous economy in the long term than if we leave with a deal.”
The chancellor said the UK will benefit from a deal dividend if it leaves with a deal, from burgeoning business confidence and a financial boost to sterling, but that is looking increasingly unlikely with the scheduled 29 March departure date so close.
But KPMG said there is still a Brexit dividend – if the UK can salvage it from the wreckage of Theresa May’s rejected withdrawal agreement.
James Stewart, head of Brexit at KPMG, said: “There is a deal dividend waiting to be released if political agreement can be achieved. Given the volatility of the next few weeks this may be more of a hope rather than an expectation.”
Paul Dales, chief UK economist at Capital Economics, added: “Overall, if parliament votes for a Brexit deal it will be rewarded with a ‘deal dividend’ that can be spent on public services.
“If there’s no deal, then there’s nothing to spend. Of course, promises on future spending are only good if Mr Hammond is around to honour them. Given the current political instability, he may not be.”
You can read our full story on the chancellor’s last economic update before Brexit over here.
12.39pm: May vows to vote against a no-deal Brexit
Theresa May will vote against a no-deal Brexit in tonight’s parliamentary vote, she has said.
The Prime Minister told MPs she plans to vote to reject the possibility of the UK leaving the EU without a deal on 29 March after parliament defeated her Brexit deal for a second time last night.
During Prime Minister’s Questions, she said that “no deal is better than a bad deal”, before backtracking under pressure from Labour leader Jeremy Corbyn.
Asked how she will vote this evening, May said: “I will be voting for the motion in my name. I want to leave the European Union with a good deal. I believe we have a good deal.”
She added: “I may not have my own voice but I do understand the voice of the country.”
The UK is set to leave the EU with or without a deal on 29 March whatever the outcome of tonight’s vote, unless MPs choose to extend Brexit in a likely vote tomorrow.
If they choose to delay Article 50, May must seek agreement from the EU in order to secure an extension.
12.12pm: Sterling climbs amid hopes MPs will rule out no-deal Brexit
The pound rose by 0.7 per cent against the dollar this morning, hitting $1.316 by midday, as traders expect MPs to reject no deal and await today’s Spring Statement.
Sterling was up 0.5 per cent against the euro, reaching €1.165 at the same point.
Its climb represents a rebound from yesterday’s fall of 1.4 per cent brought on by MPs rejecting Theresa May’s Brexit deal.
Traders predict that MP will reject no deal in tonight’s vote, which would increase the chance of an extension of article 50. This would be good news for sterling.
Chief UK economist at Capital Economics Paul Dales told City A.M: “If there’s a delay, and that delay’s for two or three months, but then there’s a deal, we think the pound would again rise not quite as far [as if there were a deal], maybe to $1.35 the end of this year and $1.40 next year.”
11.21am: Ford urges government to avoid no-deal Brexit and leave tariffs unchanged
The car manufacturer says the government should not have released its car tariff plans without consulting the industry.
“These tariffs would deal a devastating blow to much of the complex and integrated automotive industry, and would damage the competitiveness of Ford’s engine manufacturing in the UK,” Ford said, according to the BBC.
“This is why it is imperative that a no-deal, hard Brexit is ruled out as soon as possible to avoid the imposition of such a draconian tariff regime on a large part of the UK auto industry.
“We sincerely hope that political differences will now be set aside, and that politicians will work together to avoid the country leaving the EU without a deal on March 29. Any deal must guarantee the principles of tariff free and frictionless trade.”
9.41am: Risk of no-deal Brexit ‘never been higher’
The EU’s chief Brexit negotiator, Michel Barnier, warned today that the risk of a no-deal Brexit “has never been higher” following the Prime Minister’s withdrawal agreement’s second defeat.
Speaking at the European Parliament, Barnier warned the UK and EU are at a “critical point” as “the risk of no deal has never been higher”.
MPs are set to vote on whether to rule out such a scenario this evening, but whatever the outcome the UK is currently on course to leave the bloc on 29 March without an agreement.
Barnier added that the EU will continue to be “respectful” of the UK after parliament rejected Theresa May’s Brexit deal last night, following a record defeat in December.
It comes as the government has outlined its plan for a no-deal Brexit, saying it will slash the majority of tariffs to zero in order to avert a £9bn hit to consumers and businesses.
The CBI has already hit out against the plan for its failure to consult with firms (read below), and now a car industry body has also slammed the proposals.
“Today’s announcement does not resolve the devastating effect a no-deal Brexit would have on the automotive industry,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).
“No policy on tariffs can come close to compensating for the disruption, cost and job losses that would result from no deal. It’s staggering that we are in this position with only days until we are due to leave.”
He added: “Every day no deal remains a possibility is another day companies pay the price in expensive contingency measure. No deal must be taken off the table immediately and permanently.”
The government confirmed it will not make any checks on goods moving from Northern Ireland to Britain in a bid to reduce friction for trade.
Barnier also ruled out any further negotiations with the UK, dampening any hopes that May’s deal could secure passage through parliament on a third attempt.
“Why would we extend these discussions, because the discussion on Article 50 is done and dusted?” he said.
8.32am: Government to cut tariffs to zero in a no-deal Brexit
The CBI has slammed government plans to slash tariffs completely if the UK leaves the EU without a deal this month.
The government’s policy, set out this morning, comes ahead of tonight’s vote on whether MPs would back the UK crashing out of the bloc on its scheduled departure date of 29 March.
Prime Minister Theresa May’s own Brexit deal was rejected by MPs for a second time last night, by 149 votes.
Now the government has decided to slash tariffs on 87 per cent of imports in order to prevent a shock to consumers and businesses if a no-deal Brexit goes ahead.
While the government called the measure a “modest liberalisation” of tariffs, business lobby group the CBI castigated the proposals, saying firms have been left in the dark over them.
“This imposition of new terms of trade comes at the same time as business is blocked out of its closest trading partner,” CBI director general Carolyn Fairbairn told BBC Radio 4’s Today programme.
“These are being imposed on this country with no consultation with business, with no time to prepare. This is no way to run a country.”
She added that the impact of a no-deal Brexit could be a “sledgehammer to our economy”.
EU goods are currently tariff-free but in a no-deal Brexit the UK would default onto World Trade Organization (WTO) rules, in which taxes would apply.
Trade minister George Hollingbery said the measures would protect the poorest from price rises, adding: “If we leave without a deal, we will set the majority of our import tariffs to zero while maintaining tariffs for the most sensitive industries.”
The new tariffs would be in place for up to 12 months.
8pm: Little change to sterling
The pound climbed to $1.313 shortly after the Commons vote as Theresa May’s post-defeat speech opened the door to a no-deal Brexit being taken off the table.
But it retreated back to pre-vote levels of $1.306 as the currency absorbed the impact of the heavy defeat.
Ranko Berich, head of market analysis at Monex Europe said the path ahead for the pound remained uncertain.
He said: “For now markets remain convinced that Parliament will act to rule out exiting with no deal – and tomorrow’s vote is likely to confirm this assumption.
“But what happens after article 50 is extended is anyone’s guess, and as uncertainty begins to increase again, pressure will build on the pound.”
7.50pm Businesses being failed ‘over and over again’
The British Chambers of Commerce are not happy either and joined the CBI in calling for a “messy and disorderly” Brexit to be avoided at all costs.
Director general Adam Marshall said: “Businesses have been failed over and over again by Westminster in recent months, but allowing a messy and disorderly exit on 29 March would take political negligence to new extremes.”
7.45pm The business world reacts
Businesses have been wrestling with the uncertainty of Brexit for months on end and tonight’s vote ensures that uncertainty will continue.
The Confederation of British Industry (CBI) has had enough.
Director general Carolyn Fairburn said: “Enough is enough. This must be the last day of failed politics.
“A new approach is needed by all parties. Jobs and livelihoods depend on it.”
She called for an extension to Article 50 with a clear plan, and for the Conservatives to ditch their red lines and for Labour to commit to “genuine solutions.”
She added: “It’s time for Parliament to stop this circus.”
7.35pm Corbyn calls for general election
Labour leader Jeremy Corbyn said it was clear Theresa May’s deal does not have the support of the house.
He said it was now time for a general election.
7.32pm May announces ‘free vote’ on no-deal
Theresa May has urged MPs to vote against a no-deal Brexit given the “potential damage” it would do the country.
Conservative MPs will be given a free vote on the matter, meaning there will not be a party policy on the issue.
May said if no-deal is defeated than the Commons will vote on an extension to Article 50, which will have to be approved by the EU.
7.30pm Theresa May’s Brexit deal defeated
MPs have voted against Theresa May’s Brexit deal by 391 votes to 242.
The Prime Minister confirmed that MPs will now vote on whether Britain should leave the EU without a deal tomorrow.
She maintained that her belief that leaving in an orderly fashion with her deal remained the “best outcome” for the country.
2.48pm: Has public opinion changed on Brexit since the referendum?
Green MP Caroline Lucas has called on the Prime Minister to hold a public vote on her deal, claiming people have changed their minds on Brexit.
May replied that there is no evidence for this.
A poll tracker, What UK Thinks, suggests that in fact voters have changed their minds – but only marginally.
While Leave won the EU referendum with 52 per cent of the vote, now only 46 per cent of voters would choose Brexit over remaining in the EU.
Meanwhile Poundland (!) data based on sales of its Brexit-inspired burgundy and blue passport covers suggests the two sides are neck and neck.
2.42pm: Tories try to whip up support from MPs
Buzzfeed’s Alex Wickham reports that the government has called a three-line whip to summon MPs back to the Commons to support May’s deal.
It’s not clear whether the ploy will work, however – our own political correspondent, Owen Bennett, says that the benches are looking very empty right now as MPs debate May’s deal.
2.35pm: ‘Too little, too late’: Anna Soubry slams Brexit deal changes
Tory defector Anna Soubry has damned May’s deal changes as “too little, too late”, blaming May for refusing to abandon her red lines.
May replies that she has stood by the results of the referendum.
2.01pm: May urged to call general election if she loses Brexit vote
Tory big-hitter Charles Walker has called on Theresa May to call a general election if she loses tonight’s meaningful vote on her Brexit deal.
The Sun’s political editor Tom Newton Dunn reports that Walker has said: “She has to get a new mandate for the sake of the country. Needs must when the devil drives. We cannot go on trying to govern like this.”
The Prime Minister looks to be heading towards a defeat in parliament when MPs vote on changes to her deal at 7pm.
Both Jacob Rees-Mogg’s ERG clan of hard Brexiters and Tory confidence-and-supply partners the DUP have vowed to vote down her withdrawal agreement, citing insubstantial changes.
Attorney general Geoffrey Cox has admitted the changes secured by May to her controversial backstop mean his legal advice is unchanged – meaning the UK could be left stuck indefinitely tied to EU customs union rules.
1.11pm: ERG rules out backing May’s Brexit deal hours before vote
Hard Brexiters the European Research Group have come out against Theresa May’s deal hours before tonight’s vote.
The ERG has reportedly said: “In the light of our own legal analysis and others we do not recommend accepting the government’s motion today.”
The group’s decision puts the Prime Minister’s withdrawal agreement in more doubt after attorney general Geoffrey Cox said changes to the deal fail to rule out the possibility that the UK will be stuck indefinitely in the so-called backstop.
The backstop – designed to prevent a hard border between Northern Ireland and the Republic of Ireland – would tie the UK into a customs union with the EU that it cannot quit unilaterally.
However, Cox said the changes do make such a scenario much less likely.
May appears to have failed to win over the hardest Brexiters in her Tory party despite rushing to Strasbourg last night to win last-minute changes to the deal.
12.46pm: Cox tells MPs that Brexit deal changes enhance withdrawal agreement
The UK’s most senior legal adviser told parliament today that Theresa May’s Brexit deal changes enhance the original agreement between the UK and EU.
Attorney general Geoffrey Cox had earlier said that the changes won by the Prime Minister to her withdrawal agreement do not change the risk that the UK could be trapped in a customs union with the EU even after it has left the bloc.
However, he said that the provisions “extend beyond mere interpretation of the withdrawal agreement and represents materially new legal obligations and commitments”.
“There is no doubt in my view that the clarifications in the joint statement and unilateral declaration make substantive and binding reinforcements of the legal rights available to the UK,” he added.
“It confirms the EU cannot pursue an objective of trying to trap the UK in the backstop indefinitely,” he also said.
“This would constitute bad faith which would be the basis of a formal dispute before an arbitration tribuunal.”
Such a process could lead to the suspension of the backstop.
Cox told MPs that they face a “political judgement” about whether to adopt the deal or not at tonight’s vote, which is expected to take place at around 7pm.
11.38am: Former cabinet minister Owen Paterson says Cox’s advice is ‘brutally clear’
11.18am: Sterling plummets after Cox says legal risks of backstop remain unchanged
Sterling has fallen by 1.5 per cent from a morning peak of $1.325 against the dollar to $1.302 at the time of writing.
Naeem Aslam, chief market analyst at TF Global Markets, said: Sterling took a nose dive on the back of the Cox statement. It was his opinion which matters the most, now that he has made it clear that the recent deal has no weight, the door is wide open for the sterling to move lower against the dollar.
Another historic defeat is strongly on the cards for Mrs May and all options are on the table with respect to another election or no Brexit at all
For us, we are looking at the support level of 1.2650 which the price can easily touch after the parliament’s vote.
11.07am: Geoffrey Cox publishes his legal advice
Cox has published his hotly anticipated legal advice. In a blow to the government, the attorney general concedes that the legal risk of the UK becoming trapped in the backstop indefinitely “remains unchanged” and the UK would have no “internationally lawful means of exiting the protocol’s arrangements, save by agreement”.
Here is an extract of the attorney general’s verdict:
I now consider that the legally binding provisions of the joint instrument and the content of the unilateral declaration reduce the risk that the United Kingdom could be indefinitely and involuntarily detained within the protocol’s provisions at least in so far as that situation had been brought about by the bad faith or want of best endeavours of the EU.
It may be thought that if both parties deploy a sincere desire to reach agreement and the necessary diligence, flexibility and goodwill implied by the amplified duties set out in the joint instrument, it is highly unlikely that a satisfactory subsequent agreement to replace the protocol will not be concluded. But as I have previously advised, that is a political judgment, which, given the mutual incentives of the parties and the available options and competing risks, I remain strongly of the view it is right to make.
However, the legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have, at least while the fundamental circumstances remained the same, no internationally lawful means of exiting the protocol’s arrangements, save by agreement.
10.32am: Taoiseach Leo Varadkar says backstop fears can be ‘put to bed’
This morning Varadkar said the furtehr agreement reaches yesterday between May and EU Commission head Jean-Claude Junker “provided additional clarity, reassurance and guarantees” sought by those who feared the UK could be trapped indefinitely in the Irish backstop, the policy designed to prevent a hard border in Northern Ireland by keeping the UK in a temporary customs union.
He said the backstop was never a “goal to trap’ the UK in the arrangement indefinitely.
“It is not, these doubts and fears can be put to bed,” he said.
10.26am: Sporting Index says 363 MPs will spurn the Prime Minister’s deal
Sport spread betting site Sport Index predicts 363 MPs will reject Theresa May’s Brexit deal when it is put before the House of Commons in a meaningful vote today, less than the 432 MPs that rejected her deal when it was last put to MPs in January. Then, the margin of defeat was 230 votes and was widely considered one of the worst defeats in parliamentary history.
10.04am: Attorney General Geoffrey Cox rubbishes Jon Snow claim
Cox, the government’s chief legal adviser, this morning described a claim by Channel 4 presenter Jon Snow that he had been “told to find a way” to ensure legal validation of Theresa May’s newly negotiated Brexit deal as “bollocks”.
A number of MPs, including members of the Democratic Unionist Party (DUP) and European Research Group (ERG) have said they will consult lawyers on whether the legal changes represent substantial changes to the withdrawal agreement that was negotiated in January and was decisively rejected by MPs.
Shadow Brexit secretary and former director of public prosecutions Keir Starmer said he had read the withdrawal agreement overnight and would be “surprised” if the accompanying legal documents “were sufficient to enable the attorney general to change the central plank of his December legal advice” – which warned that the Irish backstop “could endure indefinitely”.
8.50am: Brexiter MPs voice support for May’s legal changes to Brexit deal
Politicians preparing to vote on Theresa May’s renewed Brexit deal this evening are waiting to hear whether or not the changes mean the UK will not be tied to EU rules indefinitely.
MPs rejected May’s deal in December by a record margin of 230 votes – a historic defeat for a sitting government.
Since then the Prime Minister has been pressing Brussels for legal changes to her deal, but EU leaders have ruled out any renegotiation of the withdrawal agreement.
However, May last night came to parliament to claim she has won legal changes to her deal in a bid to make it more palatable to MPs.
Shadow Brexit secretary Keir Starmer said this morning that there was nothing in May’s changes to give the UK a legal mechanism to quit the backstop early.
He added: “Having studied the documents, I would be surprised if they are sufficient to enable the Attorney General to change the central plank of his December legal advice.”
Four Labour MPs said this morning that they will vote against May’s deal later today.
Meanwhile Channel 4’s Jon Snow reported that attorney general Geoffrey Cox said May’s deal fails to change his advice – but that he has been told to find a way to make it work.
Meanwhile key Brexit figures have come out in support of May’s deal.
Environment secretary Michael Gove claimed the changes secured by May show the EU has made “a legally binding commitment” to prevent the backstop from becoming permanent.
A defeat in parliament would leave Brexit at risk of being “delayed and diluted”, he told BBC Radio 4’s Today programme, saying it is “make your mind up time” for MPs.
Former Brexit secretary David Davis, a longtime critic of May’s Brexit strategy, added that he may in fact vote for the deal.
“It all hinges on what Cox says,” Davis told Talk Radio. “If Cox says that this has legal force – the requirement on alternative arrangements, date, arbitration … all those together make this just about acceptable to me.”
If May’s deal is defeated in parliament tonight, it will trigger a second vote tomorrow where MPs will vote on whether to leave the EU without a deal on 29 March.
If they vote not to, the UK will stay on track to depart at the end of the month, but a third vote will occur on Thursday to decide on whether to delay Brexit.
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