The waiting game, as the UK tries to decide where to go next on Brexit, is set to overshadow Irish politics in the weeks ahead and is likely to slow parts of the economy for a period as many businesses and consumers "wait and see".
Nor will Tuesday’s vote in the House of Commons – assuming it does go ahead – be the end of it, with intense speculation about what would happen if the deal is defeated, but no clarity.
The problem in terms of planning – for the Government and for businesses – is the huge range of possible outcomes.
The Cabinet is considering a range of sectoral papers on how to cope with a “no-deal” exit, the most disruptive outcome from the Irish viewpoint where the UK leaves with no withdrawal agreement signed.
Meanwhile, businesses are now spending significant sums on contingency plans. Other investment and hiring is slowing – according to sources – as everyone waits to see what happens.
For Ireland, the short-term outcomes now fall into three boxes.
In the first, the withdrawal agreement is – after a defeat on Tuesday – eventually voted through the House of Commons. This would remove the threat of the UK crashing out next March and all the trading rules and regulations changing overnight.
The second box is the no-deal, seen now as a bit less likely by some analysts as it’s clearly opposed by a majority in the House of Commons and the EU does not want it either. However, it is still the default option; it is what will happen at the end of March unless something is done to stop it.
As Fianna Fáil ramps up its criticism of the Government’s no-deal planning, the political stakes are clear. All the parties have supported the backstop strategy. Nonetheless, the party in power always gets the blame when things go wrong. And of course if it all works out, then the Taoiseach will claim a political success.
Brexit delay
The third box is where there is a delay in the UK’s exit. There has been intense speculation that the two sides will push out the UK’s exit date under Article 50 until the summer – perhaps to late June or early July. All 27 of the remaining EU states would have to agree and, while a second referendum would justify an extension, the rest of the EU will be loath to allow it just so the UK can continue its House of Commons arguments.
As the politics plays out in the UK, the backstop – the legal guarantee that no hard border will be needed in Ireland – will remain firmly in focus. Suggestions emerging from the House of Commons that an end date be put on any application of the backstop (one proposed amendment to Tuesday’s vote suggests this be fixed to the end of 2022) would be opposed in Dublin as rendering the backstop useless. So far, sources say there is no sign of pressure from the rest of the EU on Ireland over the issue.
Even if the withdrawal agreement is eventually passed, the backstop issue will not go away. The kind of trade deal which, to date, the UK has suggested it wants, would not on its own solve the Irish Border issue. And the UK could use the EU’s assurances of doing everything possible to avoid the backstop – including examining new bureaucratic procedures and technology – to try to push the point as far as possible.
The Irish side is content, however, that the legally binding withdrawal agreement remains in place, with its commitment to guaranteeing the backstop “unless and until” it is no longer needed.
For now, success for Ireland requires avoiding a no-deal Brexit and keeping the backstop in place. Whether both can be achieved will become clear in the weeks ahead.
