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BREXIT Update: Theresa May announces stepping down as UK PM

On 24th May 2019, Theresa May announced her decision to step down as the UK Prime Minister. This follows the inconclusive cross-party talks between Labour and the Conservative parties; and an overwhelmingly negative response to her new Brexit proposal thereafter. UK’s future political direction, particularly regarding Brexit, will now depend on who succeeds May as the Conservative leader and the next Prime Minister. If a hard-Brexiteer leader takes over, one of their first actions will be to step up preparations for no deal Brexit.

Implications:

  • Overall this entails continuation of the general environment of uncertainty for businesses for NASSCOM members in the UK. That said, core policy issues for us, e.g. immigration policy regime, data security regimes remain unchanged
  • If a hard-Brexit Prime Ministerial candidate wins the Conservative leadership contest, one of their first actions would be to step up preparations for no-deal. They may also tell businesses, local government, and other stakeholders that they should plan on the basis of no-deal on 31st October 2019
  • The resignation of May after her inability to pass a Brexit deal broadly perceived as a ‘compromise’, and the significant rise of the Brexit Party (and the Liberal Democrats and Green Party representing remain) indicates that there is increasingly little political desire for compromise in on the issue of Brexit, and that UK politics will continue to polarise into Hard Brexit vs Remain
  • These developments also add to the wider environment of uncertainty in British politics

Build up to Theresa May’s Resignation:

  • After cross-party talks between Labour and the Conservative parties ended without conclusion last week, Theresa May set out details of a new Brexit proposal in an attempt to win Parliamentary support for a vote on her Brexit deal in June
  • The revised Brexit deal (which would have been the fourth time she put the deal in front of Parliament) contained several controversial proposals, including giving MPs a vote on holding a second referendum.
  • The response to May’s proposal was overwhelmingly negative from senior figures in the Conservative Party, including members of May’s Cabinet, and she faced strong internal pressure to resign her position as PM to make way for a new leader.
  • May’s unpopular deal was also accompanied by increasingly negative polls in advance of the European elections, with some polls suggesting the Conservatives could come as low as 5th across the country. This further increased pressure on May to resign

Timeline of Next Steps & Key Dates:

  • May will formally resign as Leader of the Conservative Party on Friday 7 June, but will continue to serve as PM until the Conservative leadership contest has concluded
  • The Leadership contest could be as short as 6 weeks, but this could be subject to change depending on political circumstances.
  • The results of the European election will be announced on Sunday 27th May. If the Brexit party gets a significant proportion of the vote, it will likely influence how strongly prospective Conservative leadership candidates express support for a hard-Brexit or no deal

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