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Brexit: Running out of Things to try

Stockholm (Ekonamik) – On the evening of Monday, January 29, the United Kingdom’s House of Commons voted down a proposal by Yvette Cooper, Labour Party MP, to allow parliament to extend the March 29 Brexit deadline in case of a no deal Brexit. Should this decision hold, and in the likely event that the EU rejects any attempt to renegotiate the Backstop agreement, the UK will find itself in the worst case Brexit scenario: No trade deal; just WTO membership.

The proposal was tabled as one among a range of amendments to the Brexit bill and was defeated by 321 votes to 298. MPs on both sides of the isle defied their party leadership with 17 Conservative MPs supporting it and 14 Labour MPs opposing it.

The failure of such an amendment today does not prescribe another version from being approved at a later date. However, this latest development the UK one step closer to a Hard Brexit. While a no deal Brexit is unlikely to be catastrophic, at least not immediately, it is likely it will adversely affect the UK economy more than other orderly alternatives. Although at one extreme, some have raised concerns about medicine and food shortages research does show that the uncertainty of Brexit has already reduced GDP growth and a Hard Brexit will most likely decrease trade and investment and depreciate Sterling.

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More importantly, in the absence of an agreement over the Irish border, a hard one will return, undermining the stability created by the 1998 Good Friday agreements, thus threatening to reignite tensions in Northern Ireland.

The manner in which Brexit negotiations have been conducted brings to mind a quote, which is usually often attributed to Winston Churchill (pictured), UK prime-minister during WWII, that “nations do behave wisely once they have exhausted all other alternatives”. However, time is running out, and the UK is running out of alternatives.

Picture by Pixabay

Filipe Wallin Albuquerque
Filipe Wallin Albuquerque
Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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