How Would an Extension to the Brexit Deadline Work: Q&A

LONDON (Capital Markets in Africa) = U.K. Prime Minister Theresa May has promised Parliament that it will have a chance to vote to extend the Brexit deadline next month as a way of avoiding a chaotic no-deal exit.

How will it work?

Is May calling for a delay?
No. May says she doesn’t want to delay exit day on March 29. She’s offering the vote in order to head off a growing rebellion of lawmakers and ministers who say it’s too risky to keep the option of a no-deal exit on the table.

How long would an extension last?
May says it would be just three months long, at most. She also reckons it wouldn’t be extendable — so she says it just postpones the cliff-edge scenario businesses fear the most. She insists it would have to be “short and limited,” wrapping up by the end of June.

The EU backs an extension but is divided about how long it should last. The one thing they want to avoid is a series of rolling three-month extensions that create episodic crises. Some governments and EU officials are pushing for a longer extension — with the idea of a massive 21-month extension also being floated in Brussels.

If the British insist on a short postponement, there’s probably not much realistically that the EU could do to prevent it. But they can put pressure on May to go for a long one, and could attach conditions. EU leaders have said a delay should be accompanied by a clear plan to resolve the impasse.

How will the votes be held?
May is still aiming to bring a revised divorce deal to Parliament for a vote by March 12. If the deal is rejected, she promises that the next day a vote would be held on the prospect of a no-deal. May says she will only take the country out of the bloc without a deal if Parliament explicitly backs it. If no-deal is rejected in that vote — as it almost certainly would be — then on March 14 there would be a vote on an extension.

Then what?
ay would probably ask for an extension at an EU summit on March 21. That’s just a week before Brexit day on March 29. An extension requires the approval of all 27 other leaders. It is likely they would give it. They also want to avoid no-deal.

What does business think?
The corporate world is horrified by the lack of certainty so close to the scheduled departure. A small postponement won’t do much to reassure them given that Parliament is gridlocked. “I would rather crash out at the end of March than crash out at the end of May,” Ian Funnell, U.K. managing director of Swiss manufacturer ABB Ltd, said earlier this month.

So what’s the point?
Promising an extension aims to stave off a rebellion of ministers and lawmakers who don’t want to run the risk of a no-deal Brexit. It also might help convince pro-Brexit lawmakers that they should vote for May’s deal, as the alternative might be a never-ending extension that could eventually kill off Brexit altogether. May reiterated on Tuesday that the choice is her deal, no deal, or no Brexit.

Source: Bloomberg Business News