What does a Brexit delay mean for politics, business, citizens and the EU?

What now for Labour?

In the short term, the party is prepared to continue talks with Theresa May to try to see whether a compromise can be found on the future relationship that both sides can support. Two key problems threaten the prospect of success: the prime minister’s almost non-existent authority, and whether it is ultimately ever going to be in Labour’s interests to do a deal with the Tories.

Senior Labour figures simply do not trust that whatever is offered by May or her de facto deputy, David Lidington, will have the support of the cabinet – or that it will not simply be unpicked by a future leader.

Internally, the six-month extension to article 50 complicates matters. There is no urgency to avoid no deal and come to a Brexit agreement. Labour MPs who had been thinking about finally voting for May’s deal are less likely to do so now.

Supporters of a second referendum will feel emboldened to push the party towards backing legislation to allow a fresh poll during the extension period. Even sceptics such as the shadow justice secretary, Richard Burgon, began to sound on Thursday morning like they felt there was no other option left.

Labour could well capitalise on general dissatisfaction with the Conservatives and May in the local elections next month – and later in the EU elections.

What now for the Conservatives?

The most pressing matter for the majority of Tory MPs is getting rid of the prime minister. Even the softest Tories believe May’s authority and can-kicking skills have reached the end of the road.

Yet even cabinet ministers admit there is nothing they can technically do to remove her before December, when the party can again bring a confidence vote to force May out. This is also believed to have been a factor in the 31 October extension date offered by the EU.

There are other options for dissatisfied Conservatives. Some will continue to oppose May’s deal, or even go on a parliamentary “strike”.There is little to no prospect of any Tory MP campaigning seriously in next month’s European parliamentary elections.

The one event that could cause the most serious rupture is if May was to agree to Labour’s demand for a customs union. The anger at that move would be far more intense than the agreement to extend article 50 and could trigger a much bigger cabinet walkout. It could even prompt Tories to vote with Labour in a no-confidence vote brought by the latter.

Mostly, the sense of fatigue in the party is overwhelming. With no crunch votes, summits or cliff edges on the horizon, many Tory MPs are likely to just want to get away from Westminster. Recent history suggests that does not always lead to cool heads when MPs return. That was the calculation May made when she cancelled the first Brexit vote before the Christmas recess, but MPs returned still determined to vote her deal down.

What now for the second referendum campaign?

Experts say mounting a vote before 31 October would be a challenge but possible. The basic requirements would be fresh legislation, testing of the question by the Electoral Commission and a 10-week campaign period.

The Electoral Commission recommends that legislation be in place six months before a referendum “to ensure campaigners and electoral administrators have time to prepare”.

If the first hurdle – primary legislation – is cleared, then the testing of the “intelligibility” of the referendum question can take up to 12 weeks. Once the question is agreed the Electoral Commission would then designate lead campaigners for both sides, adding more time to the process, before a 10-week campaign period.

Meg Russell, of the Constitution Unit at University College London, said the process could be shortened if the question-testing took place in parallel with the legislative process. But there are other hurdles.

“The question [of] can we get a referendum by 31 October and be within the process depends on the question. If it’s remain [in the EU] or [May’s] deal as is, then in order to make the deal legal, we would have to wait for the withdrawal bill to be passed,” said Russell.

The People’s Vote campaigners have said that the EU would be minded to extend article 50 further if a referendum was already in play and more time was needed.

What now for EU citizens?

The Brexit delay prolongs the sense of limbo for EU citizens in the UK and British nationals in the rest of Europe.

The campaign groups the3million and British in Europe said the “flextension” meant the “crippling legal uncertainty” over residency, employment and social rights would continue.

In the UK, 400,000 EU citizens have already applied for “settled status” but this does not secure all the rights enjoyed under EU freedom of movement laws.

The government wants the remaining 3.4 million to apply by the end of December 2020 if there is a no-deal Brexit, or by June 2021 if there is a deal.

British nationals in the EU face a more uncertain future and have frequently said they feel abandoned and treated like “bargaining chips”.

Brussels made it clear that the European commission did not have the authority to ringfence their rights across the EU after the Conservative MP Alberto Costa won a cross-party victory in February for the government to seek a joint commitment on securing their rights and those of EU citizens in the UK.

Social rights such as reciprocal healthcare, which is vital for retired British nationals in the EU, depend on bilateral agreements, but these cannot be struck unless the UK leaves.

Maike Bohn, the co-founder of the3million, said: “The bit of Brexit that affects 5 million real people’s lives on day one were agreed between the UK and EU in December 2017.

“Yet a year and a half later we still don’t know whether the agreement is worth the paper it’s written on.”

What now for businesses?

Over the past three years, businesses in Britain have planned for the worst and hoped for the best over Brexit. With the delay, the story remains the same.

Britain will neither fall into the two-year recession forecast by the International Monetary Fund, nor will it benefit from the “deal dividend” promised by the chancellor, Philip Hammond. Delay is seen as the least worst option.

Hammond has a particular headache. The Treasury is preparing for a spending review this summer, with the aim of ending austerity. That task will be complicated by the continuing uncertainty over the economy.

Economists believe growth is likely to trundle along at the current subdued levels – roughly 0.3% a quarter – with downside risks as the global economy slows. The Bank of England is almost certain to keep any changes in interest rates on hold for longer.

Businesses face a particular dilemma: run down their stockpiles, built to record levels in recent months, and then ramp them up again before the autumn; or retain their scope for dealing with disruption. Both come with a hefty price tag. Make UK, a manufacturing lobby group, has said some small businesses will be driven to the wall.

Companies say they will refrain from investing, given the uncertainty and the chances of fresh political upheaval from a snap election laying the ground for weaker economic growth in future.

What now for Europe?

Leaving the special Brexit summit in the early hours of Thursday morning, Emmanuel Macron, the French president, revelled in his role as the sole opponent of a long Brexit delay. The decision to put Brexit off for six months rather than a year was a “good compromise”, Macron said. But while glorying in the domestic praise over the tough stance against the UK, he admitted that it solved little. “Listen, we have no certainties today, and we have experienced in the past that there are many difficulties,” he said.

The new date offers Brussels a short breathing space from the Brexit drama. The responsibility is firmly with the British government in the following 29 weeks to either have the Brexit deal approved by 31 May or to hold European elections and stay in the bloc for a longer period – with the options of using a general election or second referendum to cut the Gordian knot that is Brexit increasingly coming into view.

There will be a review point in June to check on progress in the Brexit process but this was just another sop to Macron over his concerns that Britain could be a “rogue” member state during the extra time in the EU. It is not a cliff-edge date. The EU will instead, for a few months at least, be able to concentrate on issues around its budget, choosing successors to the European commission president, Jean-Claude Juncker, and his European council counterpart, Donald Tusk, whose tenures end in November.

Should it be necessary, the threshold for a further Brexit delay on 31 October will be higher than it was this week, and that is where a general election or referendum might be regarded as precondition.

But the EU leaders hope that the threat of European elections on 23 May might push some Brexiters to finally back the withdrawal agreement. If not, the leaders will be mired in the Brexit drama once again. As the Danish prime minister, Lars Løkke Rasmussen, left the summit, he whistled We’ll Meet Again.

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