Brexit countdown: the big vote on May's deal and beyond

Theresa May’s Brexit deal has suffered an overwhelming defeat, barely two and a half months before the UK is scheduled to leave the EU.

Here the FT provides answers to the big questions about the historic vote and what happens next.

What is the latest Brexit news?

After months of negotiation and weeks of controversy, the UK parliament has rejected Mrs May’s Brexit deal by the margin of 432 votes to 202 - unprecedented in modern times. In response, Jeremy Corbyn, leader of the Labour party, has put forward a motion of no confidence, which will be voted on on Wednesday.

Click here for the FT’s liveblog

What did parliament reject?

The House of Commons has comprehensively rejected the 585-page draft withdrawal treaty that Mrs May agreed with the EU in November as well as on a non-binding political declaration that seeks to lay out the option for talks on longer term ties.

The withdrawal treaty governs the terms of Britain’s divorce from the bloc, fixing the country’s Brexit bill of £40bn or more, establishing the rights of EU and UK citizens in each other’s jurisdictions and setting up a transition period that would retain much of the status quo and last until December 31 2020, with a possible extension until December 31 2022.

The most contentious provision is a so-called backstop that would come into effect at the end of the transition period if no other solution was found to prevent a hard border in the island of Ireland.

This would keep Northern Ireland in the bloc’s single market for goods — and so retain much of the EU’s authority over the province — while including the whole of the UK in a customs union with the bloc.

To minimise any divergence with Northern Ireland, the British government has announced that if the backstop came into force, the rest of the UK would “track” Brussels’ rulebook for goods regulation, keeping pace with new EU legislation.

Many Brexiters denounce the backstop as a “trap” that would keep the UK yoked to EU rules. While Mrs May argues that neither London nor Brussels wants the measure to enter into force, some see it as a default scenario, since it could take until the mid-2020s to negotiate, ratify and implement any trade deal that could obviate the need for a backstop.

The meaningful vote is a legal obligation under the UK’s 2018 EU Withdrawal Act, which says it must take place “before the European Parliament decides whether it consents to the withdrawal agreement being concluded on behalf of the EU”.

Read more on what the EU and UK have agreed

What happens next?

‣ See our timeline of key Brexit dates

Negotiating phase

MUST BE WRAPPED UP BY AUTUMN
  • Terms of the transition
  • Separation terms
  • Future status of Northern Ireland
  • Framework for future UK-EU relationship

Ratification phase

TO BE COMPLETED BY MARCH 29 2019, BREXIT DAY

  • Approval by at least 20 of the other 27 EU states at a summit
  • UK parliament holds meaningful vote on deal
  • UK parliament passes separate legislation to bring exit treaty into British law
  • Consent vote by European parliament

Transition phase

TO END ON DECEMBER 31 2020

  • Formal trade talks begin
  • UK seeks to replace 750 EU international agreements
  • Both sides prepare new immigration/customs/regulatory systems
  • European elections in May 2019

What are the alternatives to May’s deal?

The options range all the way from a no-deal Brexit to a second referendum that could result in the UK staying in the bloc.

After the resounding defeat for Mrs May’s deal, the country may be left scrambling for alternatives with little time ahead of Britain’s scheduled exit. Many Brexiters now prefer leaving the EU without a deal, because the treaty Mrs May negotiated could keep the UK so close to the bloc, particularly if the backstop enters force. Supporters of a softer break favour remaining in the customs union, the single market, or both. And many Remainers dream of a second referendum that would could reverse the original 2016 decision to leave the bloc.

But while some MPs and ministers favour a series of indicative votes in the House of Commons to help determine which course has most support, the government has to date backed no such idea.

Read more on the possible Plan Bs.

Will there be a delay?

With just two and a half months to go before the scheduled Brexit date of March 29 2019, the likelihood of delay — and an extension of the Article 50 notification process — is on the rise.

After Mrs May’s deal was voted down on Tuesday, this will increase still further. Many MPs already maintained there was already too little time to get the necessary legislation through in the time available before exit day.  The government is committed to passing seven Brexit-related bills covering trade, agriculture, fisheries, healthcare, immigration, financial services and the withdrawal act.

Any tweaks to Mrs May’s deal, whether superficial or substantive, will run out the clock further. A more fundamental change of course will take still more time.

Moreover, if the Commons backed a second referendum, which is not at the moment considered the most likely outcome, there would have to be a lengthy Article 50 extension, which the EU would almost certainly accept.

Even if the UK decided to head for a no-deal exit — currently thought the least probable scenario because of House of Commons opposition — some MPs suggest both sides might be willing to delay the exit date to offer more time to prepare.

Read more about the possibility of delay

What are the preparations for no-deal?

While Mrs May tried and comprehensively failed to sell her deal at Westminster, in the real world companies and individuals are preparing for a disorderly and potentially chaotic no-deal exit.

Although a majority in parliament has made clear it opposes such an exit, Brexiters believe that if Mrs May’s deal definitively perishes, the UK will eventually leave without a deal because it is the “default setting”.  The prime minister now chairs a weekly Brexit contingency planning cabinet meeting.

At present, unless Britain obtains approval from the EU for an extension to Article 50 and passes primary legislation to alter the exit date, it will leave the bloc on March 29, deal or no deal.

Until now, much of the preparation for a no-deal exit by British business has been done by large corporations, especially in the financial, pharmaceutical, automotive and food sectors.   Financial services companies have moved assets worth almost £800bn including staff, operations and customer funds to mainland Europe since the 2016 vote, according to the consultancy EY.  But now that Mrs May has lost the vote, other, smaller, companies are expected to shift their no-deal planning into top gear.  

One of the greatest concerns is the supply of medical goods. Leading figures in the pharmaceutical industry say huge efforts are being made to ensure patients receive drugs sourced in Europe.  

The big drugmakers have already built stockpiles, with most going beyond the six week supply mandated by government. Ministers have promised to charter aircraft if needed to bring in drugs with a short shelf-life; and medical supplies will take priority on government-chartered ferries. Hospitals and GP surgeries have strict instructions not to create pressures by ordering extra supplies.

The big question is how consumers will react to the uncertainty. Already a Facebook group called the 48% Preppers has gained almost 1,000 new members in the past month, while on Mumsnet, the parenting website, people are swapping tips on frozen grapes and avocado, and details of World Trade Organization tariffs on cheese.

Buying a few extra tins of tomato and bags of frozen peas over a period of weeks would hardly matter. But a sudden bout of indiscriminate panic-buying could drive up the price of staples that would otherwise have been available as usual.

Read more about Britain’s year of living dangerously

Read more on stockpiling and the hamster list

Will Brexit cause a recession?

Next to no economists forecast a British recession this year — even if there is no deal. That said, the economy was showing clear signs of slowing down at the end of last year. The hot money that the country’s economy depends on to keep moving ahead is also becoming harder to come by.

The lack of clarity over what shape Brexit may take has made also it impossible to produce a single growth forecast for the UK’s economy, according to an increasing number of economists who are now publishing multiple predictions based on different outcomes

UK economy since the Brexit vote, in six charts

live chart: Consumer confidence since June 22, 2016
live chart: UK business investment since June 22, 2016

How will Brexit affect the pound?

The aftermath of the 2016 referendum has led to some of the most volatile trading in the pound in the past half century and is expected to continue to do so up to and beyond March 29.

The most widely watched metric of sterling’s performance is its behaviour against the dollar. However, its movements against the euro, which have also been highly volatile, are widely seen as a proxy for Brexit risk.

Read more about Brexit and the pound

‣ A historic look at sterling since 1971

‣ FT Markets Data: Compare GBP with other currencies

live chart: GBP vs USD since June 22, 2016
live chart: GBP vs EUR since June 22, 2016

Will Brexit hit house prices?

Estate agents say the unknowns surrounding Brexit are weighing down the British property market. Although the market initially appeared little affected by the 2016 referendum, Mark Carney, governor of the Bank of England, has warned that a disruptive no-deal Brexit could cut 35 per cent off house prices.

‣ More on how Brexit could affect house prices and mortages

live chart: London house prices since June 22, 2016
live chart: 10-year gilt yields since June 22, 2016

What are the customs union and the single market?

In 1968, just over a decade after the European Economic Community was founded, the European customs union was completed, with a common external tariff and the intent of establishing free trade within the area.

Almost 50 years later, the internal market — or single market, as it came to be known — remains a work in progress. The “four freedoms” — movement of goods, services, capital and labour — are a founding principle of the EU.

At stake in the Brexit negotiations are the kind of ties the UK will have with both the single market and the customs union, which could shape Britain’s future for decades.

‣ More on why the customs union and single market are vital to Brexit talks

When was the Brexit vote?

Britain’s historic referendum was held on June 23 2016. Initially the British government had wanted the question: “Should the UK remain a member of the EU?” But the country’s Electoral Commission, which by law has to be consulted, was unhappy with the phrasing, noting concerns that the question was biased and might encourage people to vote Yes.

It recommended in September 2015 that the question be amended to: “Should the UK remain a member of the EU or leave the EU”? The government and parliament accepted these changes and this was the question that was asked.

How many people voted for Brexit?

On a record turnout of 72.2 per cent, 17.4m people (51.9 per cent of voters) voted Leave, while 16.1m people (48.1 per cent) voted Remain in the referendum. The winning margin was therefore 1.3m votes.

Map of the full EU referendum results

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