Watch out for amendments to Johnson’s deal
Saturday was a very dramatic day, as the so-called Letwin amendment passed Parliament, which withholds approval for PM Johnson’s deal until the legislation has become law. This also meant PM Johnson was forced to write a letter to the EU asking for an extension (although elaborating that he thinks it is a bad idea). It has become clearer that PM Johnson probably has support for his deal if it is a simple yes/no vote, against our expectation that he would fall short without DUP. All hard-core Brexiteers from ERG, most of the moderate Conservative rebels, who were expelled from the party for supporting the Brexit Delay Bill, some independents and 11 pro-Brexit Labour MPs support the deal, which should be sufficient.
Unfortunately for Johnson, it is more difficult for him to get his deal over the finish line now that he needs to implement the deal in British law, as it makes it possible for the MPs to tweak the text in such a way that the overall support for the deal disappears. The debate on the Withdrawal Agreement Bill is expected to begin on Tuesday.
There are in particular two very likely amendments to the deal, which are important to watch: (1) a confirmatory referendum and (2) a permanent and comprehensive UKwide customs union with the EU (a third potentially important amendment could be on workers’ rights and environmental protections). While we do not believe the numbers are there for the former, the latter may pass if DUP supports it (which it may, as it would mean no customs checks between Great Britain and Northern Ireland). DUP is currently considering its position (see The Telegraph (paywall)). In April, an indicative vote on a UK-wide customs union with the EU lost by three votes with DUP voting against. If such an amendment passes, we do not think there will be support for the overall deal and Johnson may be forced to pull his own deal. In this scenario, the EU is likely to grant the extension and a general election seems unavoidable. For the amendment to pass, the whole opposition DUP and some independents and moderate Conservatives must support it. However, it is not a given that SNP and LibDems will support this amendment. It would probably be a tight vote.
To avoid this, the government attempts to put the deal forward for a simple yes/no vote (‘meaningful vote’) again today. However, it is expected to be ruled out of order by House Speaker Bercow, as one is not allowed to put the same proposal forward more than once during a parliamentary session and it contradicts the Letwin amendment (Brexit legislation must be agreed first).
Again this week we have to monitor statements from different politicians and count the number of politicians supporting different proposals. We think there is a 40% probability of the deal passing this week, either because there is no majority for any amendments or because the Johnson government accepts a softer Brexit (he can always try changing this after an election). Our base case (60% probability) is that amendments mean there is no longer support for the overall deal
