May Stares Into Brexit Abyss as U.K. Parliament Takes Control

Jan 09 2019, 7:33 PMJan 09 2019, 8:45 PMJanuary 09 2019, 7:33 PMJanuary 09 2019, 8:45 PM

(Bloomberg) -- Theresa May is openly contemplating a Brexit "Plan B" amid growing signs that the British Parliament will reject the deal she’s reached with the European Union and try to take charge of what happens next.

On Wednesday, the prime minister suffered her second defeat in two days in the House of Commons, losing control of the timetable for setting out the next steps if -- as expected -- Parliament votes down her Brexit deal on Jan. 15.

In the aftermath of Wednesday’s defeat, May’s office publicly discussed for the first time what she would do if she loses that critically important vote next Tuesday. “Our intention has always been to respond quickly and provide certainty on the way forward in the event we lose,” her spokesman, James Slack, told reporters in London. “That is what we will do.”

Slack’s remark is a significant development and a clear sign that May’s team knows she’s losing ground in her battle with Parliament over who controls the direction of Brexit. It followed a defeat on Tuesday when the Commons voted to undermine her preparations for a no-deal exit from the bloc.

It all points to a scenario in which the prime minister, who leads a weak minority government, can’t dictate what happens next, while an emboldened Parliament increasingly asserts its will.

Economic Damage

With just fewer than 80 days until the U.K. is due to leave the EU, time is running out to secure an agreement and avoid what businesses and pro-European politicians fear will be a costly no-deal exit.

If the U.K. tumbles out of the bloc on March 29 without any new trading partnership in place, official analysis suggests the impact could trigger a recession, with the pound falling by as much as 25 percent and house prices by as much 30 percent.

Officially, May has not given up hope of winning the backing of the Commons for the divorce agreement she negotiated over 18 months of talks with the EU. But she was forced to cancel a plan to put the deal to a vote in December because she said she was sure it would be defeated. In the month since, little seems to have changed to suggest that she’ll win.

Against that backdrop, May offered a series of concessions Wednesday intended to help win over a few critics to support her plan. Another day of fast-paced Brexit developments included: