BankingBanking Risk ManagementBrexit: Treasurers advised to activate hard Brexit plans

Brexit: Treasurers advised to activate hard Brexit plans

Theresa May suffered a historic defeat Tuesday night after an overwhelming majority of MPs voted to reject her Brexit deal, perpetuating uncertainty for businesses across the globe.

In what was considered a heavily personal defeat for the Prime Minister, the intensely negotiated EU deal was voted down in the House of Commons by 432 MPs – representing a majority of 230. Nearly 120 Conservative MPs joined the Democratic Unionist Party in voting against Theresa May.

Immediately after the vote, the Prime Minister invited the opposition to initiate a vote of no confidence in her government, although Labour Party leader Jeremy Corbyn later revealed that he had already tabled such a motion.

A vote of confidence is expected to take place on Wednesday evening, although Theresa May is all but sure to win that vote with full backing from the Conservative Party and the DUP.

Meanwhile, a range of cross-party groups are frantically working to find a majority within the House to establish a viable, alternative path forward concerning the UK’s imminent departure from the EU.

“It is clear that the House does not support this deal,” May said in a statement to the House of Commons after the vote.

“But tonight’s vote tells us nothing about what it does support. Nothing about how – or even if – it intends to honour the decision the British people took in a referendum Parliament decided to hold.”

One proposal submitted by Welsh party Plaid Cymru would give MPs the option to list their preference from a variety of options, ranging from a Norway-style, soft Brexit, to a second referendum or even remaining within the EU.

Regardless of whether such a motion could find enough momentum to actually succeed, the Prime Minister has said she plans to spend the rest of her week meeting with parliamentarians to discuss options and bring “clarity on these questions as soon as possible” before returning to EU leaders with the UK’s fresh negotiating position.

“Every day that passes without this issue being resolved means more uncertainty, more bitterness and more rancour,” May told the House on Tuesday.

“The Government has heard what the House has said tonight, but I ask Members on all sides of the House to listen to the British people, who want this issue settled, and to work with the Government to do just that.”

Yet the Prime Minister’s resolve will do little to comfort businesses scrambling to prepare for 29 March – which is why PwC issued a statement Tuesday advising organisations to initiate their no deal plans and prepare for the UK to crash out of the EU in March without any sort of deal.

“Until a way through can be found, it is important to remember that ‘no deal’ is the default outcome,” Andrew Gray, Head of Brexit at PwC, said in the statement.

“Businesses in the UK and EU need to accelerate their no deal contingency plans. For those who haven’t started implementing no deal actions, there are still steps they can take to minimise disruption. But the longer they leave it, the more difficult this will be.”

Treasury teams and CFOs have got a particularly long to-do list in terms of preparing for a hard Brexit, with a wide range of considerations worth bearing in mind – from cash pooling and the availability of short-term debt facilities, to EU directives on tax relief, FX and access to EU payment systems.

“We’re advising organisations to urgently activate their no deal plans, while still preparing for both a deal and no deal outcome,” Gray said.

“The time to act is now.”

While businesses do the best they can in order to prepare for a no deal scenario, Theresa May is expected to continue battling with MPs. The Prime Minister has said she is prepared to devote the majority of her day Wednesday to debating the Labour Party’s no confidence motion, with a vote expected to take place when debate concludes at 7pm.

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