Is a No-Deal Brexit Inevitable?No. There is a great deal of commentary that a No-Deal Brexit (NDB) on 31 October 2019 is inevitable.

While one cannot rule out the possibility, it is far from inevitable and definitely not a racing certainty.

Reasons for optimism

There are several reasons for optimism:

  • a NDB suits no one
  • the known consequences of a NDB are severe and the unknown consequences could be even more severe
  • the EU tends to resolve crises but often very late
  • during negotiations, politicians often make statements which are at the extreme end of their positions and which do not always materialise
  • politicians often say one thing and do another (e.g. Boris Johnson voted for the Withdrawal Agreement and now argues against it)
  • the UK has pulled back from leaving without a deal on a number of occasions already this year
  • many in the UK's House of Commons seem intent on voting against a NDB. If the House of Commons voted against a NDB then that may trigger a General Election which would probably bring about an extension under Article 50 and avoid a NDB at least in the short term
  • if the UK did leave the EU (with or without a deal) then re-joining the EU is not easy. Article 50(5) of the Treaty on European Union provides that if "a State which has withdrawn from the Union asks to re-join, its request shall be subject to the procedure referred to in Article 49" which is a cumbersome and difficult process. Leaving with a deal would help facilitate re-entry and ease the transition back to membership

Routes to avoid a NDB

So how can we avoid a NDB? There are several routes including, at least, the following:

  • negotiations between the EU and the UK intensify and it reaches a point close to 31 October that there is a need to have an extension to conclude the negotiations
  • the Withdrawal Agreement and Political Declaration are both agreed by 31 October (or later) but with a "third document" which gives some comfort to the UK
  • the UK leaves on 31 October without the Withdrawal Agreement and Political Declaration but the EU and the UK each unilaterally declares certain positions which are tantamount to an agreement
  • there is a magic solution
  • there is a time limit to the backstop
  • a UK General Election before 31 October, with an extension but everything turns on the results of the Election

Route 1: Negotiations intensify and are still on-going on 31 October 2019

The first avenue is the "negotiations" route. If negotiations are still active around 31 October 2019 then one could see a further extension. It would undermine the "UK is leaving on 31 October - Do or Die" message from Boris Johnson but the change in circumstances (i.e. the "EU is now negotiating with us") would be used to justify that change in approach.

The only difficulty from the EU's perspective is that the EU may not unilaterally extend the UK's membership. Article 50(3) of the Treaty on European Union provides the UK must agree to the extension and there must be unanimous agreement among the remaining EU Member States. So it needs all sides to agree an extension. There are several new office holders taking up their positions in the EU on 1 November (e.g. new Presidents of the European Commission and the European Council). It would be quite legitimate to say that there is a need for a short period of time to allow a better deal be agreed with the new team because the outgoing team was not in a position to negotiate. It should not be forgotten that the 31 October date was chosen by the Remaining EU Member States and was not a date of the UK's choosing. The EU will be cautious however to concede too much to the UK because the EU has several important negotiations in the near future (including trade negotiations) and it will want to appear strong and not willing to change its mind easily or lightly.

Route 2: The third document

International diplomacy is characterised by parties agreeing documents which are sufficiently ambiguous that all sides can read into the documents what they want to see. It is often termed "constructive ambiguity".

It is possible that some of the language of the existing "Protocol on Ireland/Northern Ireland" could be used to provide a separate third document. This third document could highlight that the backstop is just a temporary insurance policy and would be replaced. This could give reassurance to the UK. For example, Article 2(1) of the Protocol states that the EU and the UK "shall use their best endeavours to conclude, by 31 December 2020, an agreement which supersedes this Protocol in whole or in part".

One could see the Johnson Government championing this third document as the reassurance which it negotiated and secured even if it was legally not binding and politically not very novel. It could provide a timeline and roadmap to resolve the issue even if the actual solution has not yet been devised.

Route 3: Unilateral declarations

Even if no "agreement" is concluded between the EU and the UK, it does not mean that there would be no rules surrounding the UK's withdrawal.

Each side could unilaterally declare its position and keep the system working not by "agreement" but by each side setting out its position that it would unilaterally operate the current EU regime pending a resolution of the issues. The EU has already laid the groundwork for this in some of its Preparedness Notices.

Route 4: The magic solution

The UK border with the EU on the island of Ireland will be the 38th international border for the EU. The other borders are hard borders and therefore a "magic" solution might have to be devised to keep open the Northern Irish border which ordinarily, in EU law, needs to be closed.

Route 5: There is a time limit to the backstop

An insurance policy which has a time limit on it is not very useful but a long time limit might still be a solution. If it is a long timeline then it might give Ireland some comfort knowing that the current UK Government will not want to be bound by the EU rules too long.

Route 6: UK General Election

One route would be a UK General Election before 31 October 2019. If there was a General Election called for before 31 October 2019 then an extension under Article 50 would be almost inevitably granted. However, everything turns on the results of the General Election.

Bottom line

The UK exiting on 31 October 2019 is not inevitable but is currently likely and a NDB is certainly possible but not inevitable.  Businesses still need to prepare for a possible NDB because once it happens, it would be too late to retro-fit the planning but a NDB is not inevitable.

By Dr Vincent Power, Partner, EU, Competition & Procurement at A&L Goodbody's Brexit team.