On the last Tuesday of January, the British Parliament approved an amendment rejecting a no-deal Brexit. Investors in London and all over Europe took this as a good omen, and European equities felt a boost in the immediate aftermath of the vote, with the UK_100 being one of the main beneficiaries.
But despite the temporary elation in London, more astute market observers have greeted this development with a certain degree of scepticism.
For one thing, the indisputably slim margin by which the vote passed – 318 votes to 310 – evidences the utter lack of consensus in British politics. Additionally, the amendment is not legally binding – meaning government is not technically obligated to abide by it.
Perhaps of even more concern is that the vote offers no guidance, on how to handle the main sticking point – the issue of the Irish border. Remaining EU members want any agreement to include the “Irish Backstop,” a clause that would keep the border between the Irish Republic and Northern Ireland the same as it has been for the last two decades – largely non-existent.
The issue is extremely sensitive, as the elimination of customs and other boundaries between the two territories is one of the main points of the Good Friday Agreement – the political pact that ended decades of sectarian bloodshed.
EU officials for their part refused to endorse any other deals, besides the one proposed previously, containing provisions for an open border on the Irish island. This is the very same proposal that has already been voted down by Parliament.
While no reasonable parties view the prospect of the imposition of a hard border positively, the issue is nonetheless a complex one. For hardcore Brexiters, the idea of an EU-mandated Irish backstop is unpalatable, as they see “taking control of UK’s borders,” as part and parcel of the move to “regain national sovereignty.”
And not only dedicated Brexiters hold strong opinions on borders. One of the parties propping up PM May’s government – the Democratic Unionist Party (DUP) – has the word “unionism” in its very name.
While party leader Arlene Foster has gone on record as voicing opposition against a “hard Brexit,” the very raison d’etre of unionism is to advocate for the continuous attachment of Belfast to London and to oppose any attempts to treat Northern Ireland differently than any other parts of the UK.
Unionist politicians can, therefore, be expected to oppose any agreement, that they perceive as an EU-forced attempt, to place Northern Ireland into any sort of separate jurisdiction from the UK.
Considering these facts, it seems obvious that a myriad of unresolved questions remain about Brexit and they will have to be answered before the markets can begin to feel any sort of long-term certainty.