In a whirlwind day that has implications for the Brexit process and the stability of the UK government, the Prime Minister’s leadership was indeed finally challenged culminating in a vote of all 317 Conservative Members of Parliament last night.  The Prime Minister held on with 200 MPs supporting her and 117 against.    According to the rules of the Conservative Party, the Prime Minister  cannot be challenged again for 12 months (by her own MPs).  However, the House of Commons itself is able to call a vote of no confidence at any time.

The opposition parties have not done so yet as it takes two-thirds of MPs to trigger a General Election under the UK’s Fixed Term Parliaments Act 2011.  However, in a little noticed announcement yesterday morning, the House of Commons Public Administration and Constitutional Affairs Committee warned that any clear expression of no confidence by the House could topple Government (see link here) on the basis that if the House of Commons resolved (by whatever means) that it has no confidence in the current Government and that it cannot be recovered, the Prime Minister loses her authority to continue and must resign and leave office as soon as an alternative Prime Minster is available.  That may very well be the position we are now in and we expect that this issue will start to get more attention over the coming days.

Yesterday, the Prime Minister publicly conceded that she will not lead the Conservatives into the next General election, which will further weaken her authority.  It is hard to see how the EU Withdrawal Agreement, or any other option, will obtain majority support in Parliament.  The most likely date for the deferred vote on the Withdrawal Agreement is during the third week of January 2019, but absent a significant change it is almost certain to be rejected.  Equally, there do not appear to be sufficient numbers for a second referendum in the House and as such no-deal is looking like a very real outcome given that the UK’s Withdrawal Date is set by both Article 50 of the Treaty of Lisbon and Article 20 of the European Union (Withdrawal) Act 2018. Given this, all parties are escalating their no deal contingency planning.  Firms that do cross-border trade with the EU or are reliant on EU inputs should be doing the same if they haven’t already done so.