The Conservative Party has won a convincing majority of seats in the House of Commons, and it will follow that Boris Johnson will be asked later today by The Queen to form a new government.
The Conservatives have made it clear that in the event of an election win, there would be a Queen’s Speech to open a new Parliament before the end of next week, with a Budget in mid-February. They have also published a set of priorities for their first 100 days in office, covering policy issues such as law and order and health (https://vote.conservatives.com/news/the-first-100-days-of-a-conservative-majority-government-and-the-choice-before-the-british-people).
However, central to the Conservatives’ election manifesto and very much the priority for the new government is Brexit. All Tory candidates signed up to the deal already agreed with the European Union, and we can expect to see 100% backing from the new Tory MPs for the Bill’s passing through Parliament. Even before this takes place, and No. 10 has said this morning that it will be next week, there is likely to be a collective sigh of relief from Brexiteers, those tired of hearing about Brexit and those who have been feeling the brunt of the uncertainty of the last three and a half years of unknowns.
However, that relief will be short-lived. We can now expect Johnson's withdrawal deal to be passed by 31 January 2020. But it is a deal that leaves many more questions than it provides answers. The shape of the future relationship between the UK and EU past 2020 is an unknown – as, in truth, are the Prime Minister's ambitions for it. And the timetable is less certain than it might seem.
The deal negotiated with the EU earlier this year provides for a deadline to agree a trade deal between the UK and the EU by the end of December 2020. The prospect of a no-deal Brexit will reassert itself then, leaving the parties little more than six months in practice to agree a deal – or an extension. Without that, the default is a no-deal expiry of the transitional period and therefore resorting to the Northern Ireland protocol of two borders, and WTO terms for the trading relationship with the EU.
Boris Johnson has consistently stated during the election campaign that he would not ask for an extension. The weight of consensus from trade experts is that negotiating a deal of this size within 11 months would be unprecedented. With a sizeable majority, the Prime Minister will need to balance sticking to his promises and his negotiating guns with realism about how quickly a good deal can be done – and how long he has to get one.
The political map this morning also poses new challenges, with a resurgent SNP in Scotland, bolstered by remain sentiment, meaning that Scottish independence post-Brexit will be on the agenda for the coming five years, as the UK grapples with finding a new place in the World.
The net result for business is that political risk will remain heightened in 2020. There has never been a greater need for businesses to engage in informing the policy choices that will shape the UK's economic and political future, and their own business environment. Politicians will draw on rhetoric and shows of machismo to strengthen their hand in trade negotiations, but the reality could well be an extension and / or a softening of terms, and we expect that government and policymakers will want to listen carefully. Incisive and first-hand political intelligence will be crucial to help navigate the noise and support evidence-based policy making.
We are working with companies across all industry sectors on developing their Brexit plans, analysing areas of potential regulatory and structural change for their business, implementing supply chain adaptations, engaging with industry and government to influence the future policy landscape and providing political, legal and regulatory risk analysis for decision-making around transactions, investment cycles and strategic decisions.
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