All complications of mature political democracies come together in Brexit, crippling the political system’s ability to make a decision with long-term economic impacts.
The Brexit saga is too fascinating to ignore. Almost every complication in a mature political democracy has come together in Brexit. This is why the political system finds itself crippled when it comes to making a decision that will affect the economy for a long time. At last, there is an election on December 12 that may end the uncertainty. Or, at least I expect so.
The first complication is that, in theory, it is Parliament which is sovereign. Or are the people Sovereign? The people decided to leave the European Union with a 52:48 margin between the two sides. Parliament ratified the Referendum result. David Cameron, who ordered the Referendum, resigned. His successor, Theresa May, invoked the Lisbon Treaty Article 50, giving notice to the EU that the UK wanted to withdraw. The treaty allowed two years for this. So, March 29, 2019, was the exit date.
The second big question is whether the government is more powerful than Parliament? One more question is, when the government implements the people’s wishes, should the people be allowed to revise their view by holding another referendum?
Theresa May negotiated a deal. She needed the UK Parliament to pass it. She failed three times to get a majority for her deal. Ordinarily, she would have to resign, and call an election. But, in 2011, a Fixed Term Parliament Act had been passed, which took away the power of the prime minister to dissolve Parliament and hold an election. So, despite lacking a majority in the House of Commons, and having lost a major Bill three times, she stayed in office. It was not Parliament, but her party that made her resign. After a contest, Boris Johnson became the leader of the Conservative Party, and UK’s prime minister.
Johnson promised to exit by October 31, deal or no deal. But, to prevent the no deal outcome, which could have been very damaging, Parliament again passed a Bill asking the PM to request an extension until January 31, 2020, if he did not get a deal by October 19. Miraculously, he got a deal. Even so, Parliament bound him not to exit till after he had secured the passage of the legislation to implement it. This extraordinary power of Parliament to instruct the executive was discovered by Speaker of the House John Bercow (who retired last week) by reviving a Standing Order of Parliament that had not been used for three centuries.
Johnson got his deal approved in principle by the House of Commons. But, he needed to pass the legislation to implement it. To do so by October 31, he proposed a tight timetable to debate the Bill. Parliament rejected the timetable. Johnson dithered, but got the extension to January 31, as instructed by Parliament. That removed the threat that the UK could exit without a deal. He got the parliamentary support to hold an election on December 12.
Johnson called the election because, lacking a majority, it would have been difficult, if not impossible, to pass the deal without amendments from the Opposition which would have nullified his deal. Parliament could have added that he would need to hold another Referendum to get the legislation endorsed by the people. If he has a majority after the election, he can get his deal passed unamended.
Two big questions remain. Will Johnson get a majority in the December election? If so, what effect would it have on the UK economy?
The electorate has been very volatile, and polls have failed to predict outcomes. A recent study found that 45% of the voters had changed their mind between the two elections (2015 and 2017) and one referendum we have had in the UK. But, as of now, Johnson enjoys a 15% lead over the Labour party. There has been a lot of muddle in the latter’s approach to the Brexit issue. They now promise that if they win, they will reject Johnson’s deal, renegotiate, and put the new deal to a referendum to get a decision by July 2020. The Liberal Democrats, who had slumped in 2017, are reviving since it is clear that if elected, they will revoke the Brexit application, and stay in the EU. The Scottish Nationalist Party also wants to remain, so it will join the Liberal Democrats to form a government if necessary.
For better or worse, let me put down my prediction. Conservatives: 330-340; Labour: 150-180; Liberal Democrats: 120-150; and Scottish Nationalists: 50. There are some small parties that do not matter. For a majority, you need more than 320. My guess is that Johnson will win a majority, legislate the deal, and the UK will be out of the EU by the end of January 2020. The economy will suffer a short-term shock of up to 5%, and then recover by the end of 2020.
(The author is prominent economist and Labour peer. Views are personal)