Theresa May’s government was seen in a mayhem, after the UK Prime Minister cancelled a planned vote on her European Union approved Brexit deal lately.
Brexit touched upon an important aspect on the border between Northern Ireland and Republic of Ireland. In November, European Union approved a withdrawal deal with UK on the Irish border.
Both EU and UK decided to avoid “hard border”, that includes physical checks of goods and services or infrastructure, after Brexit. This agreement brings in controversial “backstop”.
Now let’s understand what is the backstop?
It is being defined as an insurance policy and some have called it a safety net, which is envisioned to shield the UK in terms of no hard border between the Republic and Northern Ireland, even when no official pact can be attained on trade and security arrangements.
Earlier, EU wanted this controversial backstop to hit only Northern Ireland, but Theresa May has suspended out the idea of separate traditional arrangements for the Northern Ireland and the rest of the UK and she said, it would be utterly unacceptable to go ahead with it. Theresa May wanted to apply backstop on the entire UK, but this instigated the conservative MPs of the Westminster, who did not appreciate the idea of the UK being tied to European Union rules for the long time.
Finally, EU leaders gave a green signal by approving the agreement at a special summit in Brussels, held in November.
Did it resolve the issue?
The Prime Minister is facing a backlash from MPs at the house, and many of her own party ministers resigned from their position as a sign of protest at the agreement of the backstop between UK and EU. There has been a wave of disappointment by many political parties on the backstop matter, and the fear of UK to follow EU regulations for an indefinite time still has been looming around.
Blueprint for the new referendum on Brexit
With deadline in March and now not even 3 months to go until Britain is preparing to leave the European Union, agitators are aspiring for a new Brexit referendum and have even outlaid their suggested path for a fresh vote. Parliamentary vote on the withdrawal deal is scheduled next week. If the Prime Minister’s arrangement touches to end at a gloomy note, as many anticipate will inevitably be the case, then Theresa’s government will have only three parliamentary days to work around this matter. Looking at the scenario, it may be difficult for Theresa to get enough MPs to support her plan.
A key minister of May’s cabinet has cleared his stance that he could support another referendum, if parliament does not agree on Brexit deal soon. Then the original mandate to leave, taken over two years ago, will be recognised and will begin to date. The leader of Labour party, Mr. Jeremy Corbyn has flagged for the need of a general election to break this Brexit deadlock. Primarily, the issue revolved around the point that as the government is unable to pass its most important legislation, and hence, a general election looks to be the appropriate plan to resort to at the earliest opportunity.
While Theresa May is still grappling to fix the intense protest to her suggested withdrawal plan, the next few days are being crucially watched out for key developments.
Investors to watch out the scenario
For investors, if the UK has a bad Brexit, the pound is likely to fall further. In that case, stocks and funds which generate majority of their earnings overseas will be benefited by falling pound. For this reason, sterling’s pain may be the FTSE 100 gain for the constituents that generate income outside UK. However, the whole situation is still quite hazy. As, many sectors like aviation and retailers are already facing some heat from the scenario.