#Brexit deal rejected by 230 votes – “the largest defeat for a sitting government in history” (BBC). First evaluations of top economists.

With a majority of 230 votes, the British Parliament has rejected the Brexit deal of Theresa May with the EU late evening of Tuesday (January 15, 2019). This has been called by BBC as “the largest defeat for a sitting government in history”. This has caused two-sided hopes; while some now expect a hard Brexit without a transition phase, others still push for a second referendum to reverse the Brexit vote.

Most scientific observers of the ongoing spectacle over the last years typically see the facts different than the critics of the European Union and the migration flows, namely largely positive. They expect huge damage for the UK as for Europe in general. Such damage is already visible, although often ignored.

Immediately after the decison, GLO has contacted some of its prominent GLO Fellows, who have done serious research on the Brexit situation, including Nauro Campos and
Jonathan Portes.

Nauro Campos, Professor of Economics at Brunel University London, Fellow of the Global Labor Organization (GLO) and Research Professor at ETH-Zürich, is a also the Editor of the influential research journal Comparative Economic Studies.

Jonathan Portes is Professor of Economics and Public Policy, Senior Fellow, UK in a Changing Europe, King’s College, London, and Fellow of the Global Labor Organization (GLO).

The Interview

GLO: Are you surprised about the large rejection of the Brexit deal?

Nauro Campos: The most surprising thing in UK politics this week is how everything (so far) has occurred as predicted. Before the vote, there was certainty about the defeat but questions about its extent. At the lower-end, the estimated margin was about 160 votes (which would already make it a “historic defeat.”) SkyNews I believe held the upper-end with a defeat by about 225 votes. Thus 230 votes would be shocking only to those that don’t follow the debate closely (and it has been such a repetitive, shallow and infuriating debate that there are indeed many good reasons not to follow it.)

Jonathan Portes:  Yes. Few expected quite such a heavy defeat – more than half of Conservative backbenchers rejected it as did almost the entire Parliamentary Labour Party. But the key is that while there was a huge majority against the deal, there is no majority for any particular alternative. Most Conservatives who voted against did so because they prefer No Deal, or think the EU27 will agree under the threat of No Deal to remove the so-called backstop. But most Labour MPs voted against because they want a permanent customs union, Single Market membership, or to remain in the EU. 

GLO: What do you expect to happen now, general elections, a new referendum, a cold Brexit, or else?

Jonathan Portes: Nobody knows.  The vote clearly increases the probability of No Deal –  it also increases the probability of a second referendum.  The key is whether the majority in Parliament that rejects No Deal will be able to decide on a single way forward, whether that’s Single Market membership/the “Norway option” or a second referendum.  And that will depend on whether enough Conservative MPs are prepared to defy the strong views of their own membership and the obstinacy of Theresa May, who so far has proved entirely unwilling to seek a cross-party compromise.

Nauro Campos: I am writing this less than two hours after the result from the vote so, if
predictability will rule this week in Westminster (for a change), than the prime minister will win the vote of no confidence tomorrow closing down a main avenue for a general election. Immediately after voting down the piece of legislation that gives May’s government the reason to be, the DUP (and one should soon expect the rest of the Conservative rebels to come along) said that tomorrow they will show themselves confident, instead. Clearly, it doesn’t matter confident in what. This is the stuff of populism and has been so for the last three years. A hard Brexit seems less likely this week but which of the other options may prevail (second referendum, revocation or extension of A50) should be easier to gauge this time on Monday (after the Prime Minister goes back to parliament with details of her proposed Plan B.)

GLO: What are the consequences for Europe?

Nauro Campos: I guess Europe will continue to do what it has been doing in the last few months regarding Brexit, namely, (1) to wait for Westminster to come to terms with the agreements it signed in December 2017 at the end of phase 1 of the negotiations and (2) continue to prepare for the worse case scenario (a no deal) but confidently showing that it is much better prepared for it than the UK currently is.

Jonathan Portes: The EU27 can do little except wait for the UK to sort itself out. There is little point in making minor changes to the deal on the table when the UK is so divided. We simply are not currently in a position to negotiate in a credible way. The sensible thing for the EU to do is to continue to prepare for No Deal, while being prepared to response positively when the UK  – perhaps under a different Prime Minister or government – actually demonstrates that there is a Parliamentary majority for a specific way forward, particularly if it involves extending Article 50 to allow a second referendum, a general election, or some other process.

GLO: Gentlemen, thank you very much! And good night.

Note: GLO here is Klaus F. Zimmermann, UNU-MERIT, Maastricht University and President of the Global Labor Organization.