UK parliament set to reconvene after government defeat: Here's what it means for Brexit

EU flags flutter on the day of Britain's newly elected prime minister Boris Johnson's debut in the House of Commons, outside the Houses of Parliament in central London on July 25, 2019.

NIKLAS HALLE'N | AFP | Getty Images

The U.K. Parliament is set to reconvene on Wednesday following a historic ruling defeating Prime Minister Boris Johnson's decision to suspend Parliament in the run up to Brexit.

The Supreme Court ruled that it had been unlawful for Johnson's government to suspend (or "prorogue" as the process is formally known) Parliament for five weeks, the eleven judges ruling unanimously that there had been no justification for such an "extreme action."

Essentially, the court ruled that the decision by Johnson's government to advise the queen to suspend parliament was unlawful "because it had the effect of frustrating or preventing the ability of Parliament to carry out its constitutional functions without reasonable justification."

Responding to the ruling, Johnson told the BBC the verdict was not right but would be respected. Nonetheless, there were widespread calls for Johnson to resign. He said the government would "get on and deliver Brexit on October 31st come what may."

Now, Parliament is set to reconvene in Westminster on Wednesday morning. Experts have pondered what the judgment could mean for Brexit, Boris Johnson's political future and Parliament.

No-deal Brexit risk receding

Parliament had been shut down from September 10 onwards and had been due to re-open on October 14, just a few weeks before the Brexit departure date of October 31. There is currently no Brexit deal in place although lawmakers have already voted to prevent Johnson's government from taking the U.K. out of the EU without a deal. The prime minister has repeatedly said the U.K. will leave the EU no matter what on Oct 31, leaving little time to strike a deal with Brussels.

Still, analysts like Eurasia Group's Mujtaba Rahman think the chance of a no-deal Brexit has been reduced and that it is more likely the government will compromise to secure a Brexit deal.
"Johnson will be under greater pressure to compromise in negotiations with the EU so he can strike a last-minute deal. However, there is little sign of any meaningful progress in his talks with EU leaders during his visit to New York," Rahman, the managing director at Eurasia Group, said in a note Tuesday.

Brexit delay likely

When lawmakers voted to stop the government being able to push through a no-deal Brexit, they also voted that the prime minister would have to ask for a further Brexit delay if Parliament has not agreed a Brexit deal, or accepted no deal, by October 19.

Kallum Pickering, a senior economist at Berenberg Bank, said it was very likely heading for a further delay, putting the probability at 85%. With Johnson weakened even more, the probability that parliament could pass a Brexit deal by 31 October, which we put at 12.5%, may be receding further."

Election time then referendum?

Many analysts believe the U.K. will secure a further delay to Brexit and will then have a general election. How that could pan out is uncertain, with the ruling Conservative Party still ahead in voter intention polls and the opposition Labour Party ambiguous over its Brexit stance, leaving the other opposition party, the Liberal Democrats, as the only clearly anti-Brexit party.

Berenberg's Pickering said the bank's view was that the U.K. would head back to the polls soon after a delay is secured, and/or a second referendum could take place.

"In our view, the hard Brexit risk is now mostly a function of the ability of Johnson to win an election. In any other scenario, election then referendum, or straight to referendum, the distribution of probabilities shifts towards a soft Brexit or remain. In a second vote on EU membership, moderates would campaign for remain while the Brexiteers would be partly in disarray. A lot would depend on the question on the ballot, however," he said.

Boris Johnson resignation?

Experts said the ruling was historic and a heavy defeat for the government and prime minister, who has only been in post (elected by his party rather than the electorate) since July. Since then, he has suffered a series of defeats but despite the Supreme Court ruling being the largest, he has said he won't resign despite calls from opposition lawmakers to consider his position.

Chris Scicluna and Emily Nicol from Daiwa Capital Markets recapped in a note Tuesday just how turbulent Johnson's short time in office has been and whether he could now be bound to resign – they conclude the lack of unity among opposition parties might let Johnson off the hook:

"In the little more than two months since entering 10 Downing Street, his (Boris Johnson's) track record is ignominious in the extreme. Having lost his majority in the House of Commons by a significant margin, he has been defeated in every one of his six key votes in the Chamber. His proposal for an early General Election was blocked. He has seen key Ministers resign. He is repeatedly economical with the truth. And now he has been found attempting to bend the U.K.'s constitution in his favour, unlawfully shutting down Parliament and misleading the queen," they said.

"In any previous political period in the U.K., that latter offence alone would have been a resigning matter … These are not, however, normal times. If they united in Parliament, the opposition parties would have the numbers required to unseat the Prime Minister … However, they are divided in many important areas."

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