Where does a hung parliament leave Brexit?

In the wake of last week’s election, Britain now has a hung parliament which means that the Conservatives, even with the DUP’s backing, have a much weaker government than before.

With Brexit negotiations due to begin in little over a week’s time, Brachers partner Erol Huseyin argues that this will translate into a weaker negotiating position, meaning that we may end up with a worse deal than we thought would be the case when the Article 50 notice was served earlier this year – and a significant increase in litigation due to legal uncertainty.

Erol Huseyin, Commercial partner at Brachers, commented:

“Theresa May’s gamble to secure a stronger mandate from the UK electorate before embarking on the Brexit negotiations has unfortunately back-fired. I fear this means we are heading for a much harder Brexit than we had hoped for.

The end result, sadly, is a constitutional and legal mess. I say a constitutional mess because a hung parliament will always struggle to make progress in the absence of a strong majority. Consequently key projects, investments and enabling legislation are unlikely to move forward with much pace over the next few years. Added to that, the now weakened government will need to focus much of its effort on the Brexit negotiations which are now imminent.

Before the election nobody knew what Brexit would look like and now we have even less idea. There is a real risk that at the end of the two year Article 50 negotiation period a number of our domestic laws and their interaction with EU legislation will be left hanging. I can see the potential for a significant increase in litigation arising from legal uncertainty once the Brexit negotiations conclude. There is also the possibility that the two year period will, by process of negotiation, have to be extended resulting in further prolonged uncertainty.

All of this means greater doubts for individuals and business, which could well affect the UK investment climate for a number of years to come.”

In the immediate wake of the election, the pound fell by some 2% in value against the dollar, though it later showed signs of steadying. It has fallen around 12% against the dollar since last June’s Referendum.

Erol Huseyin said:

“For as long as the unpredictability continues, we are likely to see an even weaker pound. A falling pound is of course good for exporters and the UK tourist industry but bad news for domestic and commercial importers who are buying goods and services internationally in foreign currencies. The price of many imported items like food, petrol and electrical goods will no doubt start to rise, putting pressure on UK inflation.

What will be interesting to see is whether the notion of a second Brexit referendum now starts to gain any momentum. If we end up heading down that road, a second vote for Brexit would, I believe, enhance Theresa May’s position around the table in Brussels. Conversely, if the result were to be Remain we would be in utterly unknown territory from a constitutional, legal and democratic perspective.

There is no procedure in EU legislation allowing a party to withdraw its Article 50 notice once served and the recent judgement of the Supreme Court concerning the government’s authority to serve the Article 50 notice supports the position that, once triggered, the procedure is irrevocable. I suspect the UK may already have soured relations sufficiently with the EU for any reversal of our decision to leave to be unthinkable.”

This content is correct at time of publication