Introducing Section 20 of the EU Withdrawal Act

Extending Article 50 is easier and more likely than some people let on.

The Conservative party conference is going about as expected, with the Prime Minister reportedly booed at the Association chairman’s dinner; Boris Johnson giving a witty, tub-thumping speech which ended, incongruously, with a call for everyone to back Theresa May; and every Cabinet minister jostling for leadership attention.

Nothing has changed. I doubt anyone is watching much at home. Certainly, I noticed that the YouTube figures for Boris’s speech topped out at 1,896.

None of our political leaders wants to focus their minds on the matter at hand. What happens on 30th March 2019, the day after we are scheduled to leave the EU?

Theresa May wants us to believe we will be out of the EU, but in some sort of limbo. Having handed over a cheque for £39bn, we will have won in return a political declaration for her Chequers proposals which are a complicated and unsatisfactory. Failing that, we will supposedly walk away without a deal.

Boris Johnson wants us to be in exactly the same limbo position. Only “negotiating properly” for a “Canada style free trade deal”. He apparently has no answer to the questions about the Irish border or why the EU would agree to anything he proposes. Perhaps this is why some call it “Blind Brexit”. 

Markets are sanguine

Here is another scenario, which explains why, relatively speaking, markets remain so sanguine. It is easy, from a legal point of view to extend Article 50. Even if Chequers and Canada Plus etc all fall by the wayside, there is still a strong likelihood that Britain will be limping along, obeying all the rules and doing as it is told without any say in the matter.

No wonder the IPO market remains open. Sterling is hovering around $1.30. 10-year gilts are yielding 1.6%. The economy is still plodding along.

Section 20 of the EU Withdrawal Act

The provisions the EU Withdrawal Act, paragraph after paragraph of them, all pivot on “Exit Day” which we are told in Section 20 “means 29 March 2019 at 11.00 p.m.” But later, it goes on to say that:

“A Minister of the Crown may by regulations amend the definition of “exit day” in subsection (1) to ensure that the day and time specified in the definition are the day and time that the Treaties are to cease to apply to the United Kingdom.”

Flip the pages on to Schedule 7, Part 2 (14) and the Act says:

Power to amend the definition of “exit day”.
14. A statutory instrument containing regulations under section 20 (4) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

So, put simply the Government of the day can change the day we leave the EU, as long as it gets approval from Parliament. More likely, Parliament would compel it to do so if dropping out without a deal looked probable.

What about the EU? How would it respond to a humiliating appeal from the British Government, perhaps initiated by Parliament, to extend Article 50?

Well, the relevant powers are in Article 50 itself. The third paragraph says:

The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

Is No Deal really likely?

Clearly businesses have both a fiduciary and regulatory duty to prepare for No Deal. One cannot help feeling that, in reality, Limbo Land is much more likely. Extending Article 50 does not require primary legislation by either side.

If everything else falls over, our plan to use the UK’s existing membership of the European Economic Area by applying to join the related European Free Trade Association (by far the best option for 30th March 2019) remains on the table. If only politicians would admit it.

We have published Norway then Canada, a new strategy to avoid a Brexit smash, with a foreword by David Owen, on Amazon LINK.

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