Harder Brexit or Referendum? What lies in the future of the UK economy and what everyone is gossiping about.

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Who is going to take the lead now that Theresa May is out of the game? And how will the results of the recent European elections influence Brexit negotiations?

What is clear is that with less than 6 months from the day the UK should definitely leave the EU (31st Oct, as it stands…), the future is more uncertain than ever.

Let’s have a look at the possible scenarios…

First question: who is going to be the next Prime Minister?

As soon as Theresa May left the podium outside Downing Street, focus turned towards the rest of the Tory party.

Jeremy Hunt and Dominic Raab were first out of the blocks to replace May. Sajid Javid and Michael Gove also jostled for position while Boris Johnson broke his silence about his plans.

Jacob Rees-Mogg revealed he won't run for the leadership because he won't get enough support to win and Amber Rudd ruled herself out too. Other contenders vying for the job include former Leader of the House of Commons Andrea Leadsom plus Health Secretary Matt Hancock, Housing Minister Kit Malthouse and Brexit Minister James Cleverly.

They span the whole of the Brexit spectrum, including Eurosceptic hardliner Esther McVey and Rory Stewart, who is against No Deal.

What are the odds?

Here are what the bookies are saying on May 29, 2019.

Boris Johnson - 2/1

Former Foreign Secretary Boris Johnson is still a hugely popular figure among Tory grassroots and the general public. Boris quit as Foreign Secretary on July 9, 2018, in a blow to May's Government. He walked out just hours after she lost Brexit Secretary David Davis over her Chequers plan to keep close ties to Brussels. He has said he would "of course" stand in the Conservative leadership contest to replace Theresa May.

Dominic Raab - 5/1

The former Brexit Secretary quit the cabinet in protest over Theresa May's soft divorce deal with the EU. Raab has insisted No Deal wouldn't be chaotic for Britain and said the short-term risks were "manageable". He has blasted those who want to extend Article 50 or a second referendum.

Michael Gove – 7/2

The Environment Secretary has achieved a remarkable turnaround since knifing Boris Johnson during the 2016 leadership contest. His support among party members dropped through the floor and it seemed his chances were gone for ever. But Mr Gove, who led the Leave campaign in the EU referendum, has rebranded himself as an ecowarrior as Environment Secretary. He also said No Deal must be kept on the table.

Andrea Leadsom - 6/1

Though an unlikely candidate at the time, Brexit campaigner Leadsom reached the final two of the 2016 leadership contest. She withdrew over ill-judged remarks about Theresa May not being a mother. Leadsom resigned as Leader of the House on May 22nd 2019, with reports claiming May begged her not to go.

Jeremy Hunt – 14/1

Mr Hunt was the longest-serving Health Secretary in British history before replacing Boris as Foreign Secretary. Mr Hunt is known to have leadership aspirations and now says he backs Brexit despite campaigning for Remain during the referendum. Just hours after Mrs May resigned, he put his name into the hat to be in the running to replace her.

Jeremy Corbyn – 25/1

Jeremy Corbyn still has strong odds on becoming the nation's next Prime Minister, despite it being inevitable that the next PM will be a Tory. The Labour leader has made calls for a General Election but despite May's resignation there will not be one - yet. The Labour leader has had to fight constant opposition from his own MPs including a leadership contest after just a year. But the party swung behind him after a much stronger than expected 2017 General Election when Labour picked up 30 seats and Mrs May lost her majority. Although the fabled "youthquake" of support from younger voters did not happen, Corbyn finally agreed to consider a second referendum in February 2019 — just weeks before the UK's scheduled departure date.

What seems clear at the moment is that the results of the European elections (which saw the country polarised with the Brexit party getting 32% of votes, and the pro-referendum parties getting a cumulative 35%) are pushing both Tories and Labours towards more extreme positions – with more Tory willing to go for a harder Brexit and the Labours supporting a new referendum. 

Second question: what will a No Deal Brexit mean for the UK economy?

The collapse of cross-party talks coupled with the imminent Tory leadership contest - to be decided by a party membership overwhelmingly in favour of a no-deal Brexit - has put the nuclear option back on the table.

There are many senior Leave supporters who think that no deal “would be perfectly acceptable as long as sufficient preparations have been made”, according to the BBC’s Chris Morris.

Backbench Brexiteers have sought to present a so-called “cliff edge” Brexit as an opportunity rather than a threat and dismissed criticism as Remainer scaremongering.”

Critics argue that leaving without an agreement would have disastrous consequences for businesses, create chaos at the borders, drive up food prices and lead to a shortage of essential goods.

Businesses leaders have also voiced their fears, with Amazon UK chief Doug Gurr predicting that Britain will descend into “civil unrest” within weeks if it leaves the EU with no trade deal in place.

“Despite Brexiter claims, this is not a rerun of ‘Project Fear’,” says an editorial in the Financial Times. “Leaving the EU without formal agreements would result in instant, harsh consequences.”

Without a bilateral trade deal with the EU, Britain would be subject to World Trade Organization (WTO) rules. UK exports would face the same customs checks and tariffs as other countries outside of the EU. Experts agree that the overnight end of frictionless zero-tariff trade would be likely to increase the price of some goods, lead to shortages, and cause significant delays on both sides of the Channel.

Leaked research carried out by the UK’s own Brexit department suggests that without deals on customs and trade, parts of Britain would run out of food and even medicines within a fortnight of the present agreements lapsing, according to an editorial in The Guardian. “And that is not the worst possible scenario: it is one that lies in the middle of the range of possibilities,” the newspaper adds.

However, the Government says that contingency planning for this is already under way. The provisions would include stockpiling food and medicines and turning parts of the A20 in Dover into a permanent lorry park.

Third question: can another Brexit referendum ever happen?

One option to break the political stalemate, could be to offer the public a new Brexit vote.

The Electoral Commission has told BBC News it has "contingency plans in place" and is ready "to respond quickly to any unscheduled poll".

So how would another referendum on the UK's membership of the EU work?

To allow a referendum to happen, legislation would first of all need to be passed in Parliament. This would set the rules of the poll and the regulation of the campaign.

That would mean the majority of MPs would need to support the idea of holding another vote.

It took seven months before Parliament signed off the previous legislation which led to the 2016 referendum.

But could it be done more quickly this time?

One possible option is to use the 2015 Act as a template and, in effect, copy over large chunks to speed the process up. But it's not unheard of for countries to hold referendums on much tighter timescales. Three years ago, Greece organised a referendum in just over a week, in which voters rejected the terms of an international bailout following the country's debt crisis.

However, if referendums are organised too hastily, it can give the impression that "normal procedure is not being followed" and that voters may see the eventual result as illegitimate. A referendum similar to Greece's timescale, for example, would not allow enough time to organise postal votes and assess the question on the ballot paper.

Are there any other options?

Yes, a major renegotiation of the current deal on the table is possible, as it is possible to cancel Brexit completely or call for a general election.

The new Prime Minister could choose to negotiate a completely new Brexit deal - perhaps in accordance with votes of MPs. This wouldn't be a question of making small additions to the political declaration. However, the EU can refuse and in that case the government would have to plump for one of the other options instead – including a no deal Brexit.

Another option – quite unlikely at the moment - is to cancel Brexit. The European Court of Justice has ruled that it would be legal for the UK to unilaterally revoke Article 50 to cancel Brexit (without the need for agreement from the other 27 EU countries). With the government still committed to Brexit, it's very likely that a major event such as a further referendum or change of government would have to happen before such a move. It's also not totally clear what the process would be. But an act of Parliament calling for Article 50 to be revoked would probably be sufficient.

The next months are crucial and it will be interesting to see what happens – will whoever ends up in charge be able to unravel this mess?

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