The Wall Street Journal - 21.10.2019

A8| Monday, October 21, 2019 **** THE WALL STREET JOURNAL.

month extension to Britain’s EU

membership, to Jan. 31, to avoid

the risk the country tumbles

out of the bloc at the end of Oc-

tober without a legal framework

to smooth its withdrawal.

Mr. Johnson, who had said

he would rather “die in a

ditch” than request an exten-

sion, complied. But in a gesture

aimed at showing a domestic

audience that he was acting

unwillingly, he didn’t sign the

letter requesting the delay. In a

separate letter to European

Council President Donald Tusk,

he urged EU leaders to turn

down his own request.

“A further extension would

damage the interests of the

U.K. and our EU partners,” Mr.

Johnson wrote. Downing

Street’s calculation is that

lawmakers are more likely to

vote for the withdrawal pack-

age if the risk of leaving with-

out a deal remains open.

“We are going to leave on

Oct. 31. We have the means

and the ability to do so,” Mi-

chael Gove, a senior minister

in Mr. Johnson’s administra-

tion,saidSundayinaninter-

view with Sky News.

The extension request

leaves EU leaders with three

knotty decisions: whether to

approve the extension; when

to make that call; and how

long an extension should last.

EU governments are very ea-

ger to be finished with Brexit as

soon as possible so the bloc can

move on to other pressing chal-

lenges. They will want to keep

the pressure on U.K. lawmakers

to support the agreement they

hammered out with Mr. John-

son, but they also want to avoid

an accidental no-deal outcome if

they don’t extend the deadline

and the U.K. exits Oct. 31 with-

out a deal.

On Saturday afternoon,

French President Emmanuel

Macron spoke with Mr. John-

son and expressed “the need

for a quick clarification of the

British position” on the agree-

ment, an aide said. Mr. Macron

said that “a delay would not be

in the interest of either side.”

Mr. Johnson also spoke with

Dutch Prime Minister Mark

Rutte and Mr. Tusk.

Mr. Tusk said on Twitter on

Saturday evening that he

would take a few days to con-

sult with other EU leaders to

decide on an extension re-

quest. A senior EU official said

Sunday it was “very unlikely”

a decision would be made be-

fore U.K. lawmakers vote—one

way to keep the pressure on

British lawmakers.

ernment would oppose—for
example by requiring the deal
be confirmed by a second ref-
erendum. Arcane parliamen-
tary procedures may also
thwart Mr. Johnson’s efforts
to secure a parliamentary vote
on the deal on Monday.
Mr. Johnson won European
leaders’ approval for a revised
Brexit deal at a summit on
Thursday, a diplomatic success
that defied the expectations of
his political opponents.
The prime minister pre-
sented the deal to lawmakers
in a rare Saturday sitting of
Parliament. Urging them to
vote for the package, he said
his new deal provided “a real
Brexit” that would be “the
greatest single restoration of
national sovereignty in parlia-
mentary history.”
But instead of voting on the
deal, lawmakers approved a
measure that requires a deci-
sive vote to be held only once
all the accompanying legislation
has been properly scrutinized, a
process that can take days,
weeks or even months.
The government is still
hopeful it can win passage.
Some lawmakers voted to
force the extension only to
avoid the economic disrup-
tion they fear would ensue
from the U.K. leaving the EU
without a deal and say they
will support it once that risk
is extinguished.
The measure’s passage trig-
gered a law that required Mr.
Johnson to request a three-

Continued from Page One

time to scrutinize the agree-

ment. Opposition lawmakers

jumped on the opportunity to

force Mr. Johnson to do some-

thing the prime minister

vowed not to: ask for a Brexit

delay beyond Oct. 31, the

deadline for the U.K. to leave

the EU.

Old colleagues were aghast.

“He is a very dear friend, but

he is completely wrong,” Iain

Duncan Smith, a prominent

Euro-skeptic Conservative

lawmaker, said of Mr. Letwin.

Most of the 21 expelled Con-

servatives backed Mr. Letwin’s

move, though some voted with

the government.

Mr. Letwin said he will sup-

port Mr. Johnson’s deal. His

move on Saturday was aimed

at ensuring that all the legisla-

tion to implement the deal

was in place so that the U.K.

didn’t fall out of the trade bloc

by accident come the end of

October. “We will continue to

vote for it and seek to ensure

that it becomes law,” he said.

In a good sign for Mr. John-

son’s deal, several of his fellow

rebels have agreed.

WORLD NEWS

LONDON—Inside many Brit-
ish boardrooms, Brexit fatigue
just got worse.
U.K. lawmakers voted Sat-
urday to postpone a final vote
on Prime Minister Boris John-
son’s deal to split with the Eu-
ropean Union. The move de-
layed a decision by Parliament
over the pact and forced Mr.
Johnson to ask for another
Brexit delay.
That would be the third
postponement from an origi-
nal late March divorce date. It
extends yet again a three-year-
plus period of deep uncer-
tainty for British and Euro-
pean businesses, particularly
those that import and export
goods across the English
Channel. Mr. Johnson is very
likely to face a general elec-
tion in coming months, too,
exacerbating political uncer-
tainty over how, when and
whether Brexit happens.
Managers such as Richard

Kennedy just want closure.

“When a democratic deci-

sion is made, the responsibility

of politicians is to deliver it in

a harmonious way that doesn’t

cost society,” said Mr. Kennedy,

chief executive of Devenish Nu-

trition, a Belfast, Northern Ire-

land-based maker of specialty

food for animals. Uncertainty

over Brexit has scrambled his

investment plans and cost

countless hours of manage-

ment time. He said the latest

delay, coming so soon after the

breakthrough renegotiation,

was disappointing. “It’s unfor-

tunate that there’s more uncer-

tainty,” he said.

Richard Swart, global sales

and quality director at Berger

Global, a unit of Germany’s

Ringmetall AG that manufac-

tures rings used to seal con-

tainer drums, likens the U.K.’s

quitting the bloc after 40

years of integration to “taking

the egg out of an omelet.”

He said the fog for business

won’t lift even if the U.K.

leaves under Mr. Johnson’s

terms, as the country will still

have to negotiate a free-trade

accord with the EU, a difficult

and potentially lengthy pro-

cess. A deal is “not the end of

the uncertainty. It’s actually

the beginning,” he said.

Apart from frustrating Brit-

ish businesses, the Brexit cri-

sis has handed economists a

unique petri dish to explore

the effects of a prolonged pe-

riod of uncertainty on an ad-

vanced economy.

Brexit is unusual: Unex-

pected events such as terrorist

attacks, oil shocks or even fi-

nancial crises tend to trigger

surges in uncertainty that fade

relatively quickly, as investors,

executives and households ab-

sorb the policy responses and

discern the contours of a likely

resolution.

The U.K.’s attempt to leave

the EU, by contrast, has been

characterized by frequent re-

versals, bouts of indecision

and upsets that have kept ev-

eryone guessing at what the

final outcome will be.

Nick Bloom, a Stanford Uni-

versity professor who has

studied the economic effects

of uncertainty for more than

25 years, likens Brexit to flee-

ing down a corridor in a hor-

ror movie, with the door lead-

ing to escape always just out

of reach.

“It never seems to get any

closer,” Mr. Bloom said. “I think

that’s extremely damaging.”

Data point to the mounting

costs of the U.K.’s irresolution.

Business investment has

stalled, hurting growth and

productivity. U.K. executives’

time and energy are swal-

lowed up by the Brexit fog.

Costs are rising and consum-

ers are trimming spending,

squeezing company profits.

Naeem Arif, who employs

16 people at Stechford Carpets

Ltd., his carpet business in

Birmingham, England, said at

this time of the year he would

usually be hiring more carpet

fitters and extending his

store’s opening hours to take

advantage of the extra demand

in the run-up to Christmas.

But the “golden quarter” in

retail that usually runs Octo-

ber to December has so far

failed to materialize.

“We are definitely seeing a

slowdown,” he said. A fall in

the pound, down 13% against

the dollar since the 2016 refer-

endum, has pushed up costs,

he said.

Several analyses using a va-

riety of economic techniques

suggest the U.K. economy is

around 2.5% to 3% smaller

than it would have been had

the country voted to remain

an EU member state, reflect-

ing weaker investment as a re-

sult of uncertainty and a

squeeze on consumer spend-

ing from a drop in the pound.

The Organization for Eco-

nomic Cooperation and Devel-

opment predicts the U.K. will

expand 1.2% this year, com-

pared with 1.4% last year and

2.3% in 2015, the year before

the Brexit vote.

Bank of England official Mi-

chael Saunders, in a recent

speech, said it was as if the

U.K. had developed “a slow

puncture, such that growth

has slowed to a mere crawl.”

Jon Swallow, director of

Jordon Freight Ltd., a freight-

management company, vents

his frustration with the lack of

clarity over Brexit by publish-

ing video diaries on YouTube.

“I’m doing so much work

for Brexit I need an outlet,” he

said.

BYJASONDOUGLAS

Delays to Brexit Test Boardroom Patience

Continuing debate is

offering a real-world

experiment in

economic uncertainty

Italy Japan U.K. Germany France Canada U.S.

BehindtheCurve

TheU.K.hasseenlessrobustgrowthsincetheBrexitvote.

GDP,changefrompreviousyear

Source: Organization for Economic Cooperation and Development

Note: 2019 and 2020 are projections

3

–

–

–

0

1

2

%

2012 ’20’12 ’20’12 ’20’12 ’20’12 ’20’12 ’20’12 ’

stance, that it should be sub-

ject to another referendum.

Mr. Johnson’s ministers say

they are confident the deal

will pass. “We now have the

numbers to get it through,”

Dominic Raab, U.K. foreign

secretary, said on Sunday.

But with the vote on a knife

edge, Mr. Johnson needs a

group of 21 lawmakers whom

he ejected from his own party.

They were expelled for facili-

tating a September vote to

force a delay to Brexit if a deal

weren’t approved by parlia-

ment by this past Saturday.

They include one of Winston

Churchill’s grandsons, two for-

mer chancellors of the exche-

quer and Mr. Letwin, a former

merchant banker.

Many of this crowd, known

as “the 21,” say they do want

Brexit to happen, but in an or-

derly manner. Government of-

ficials, however, worry that

they could yet try to derail the

deal Mr. Johnson is present-

ing.

Their quest has left them in

an unusual position. The 63-

year-old Mr. Letwin, “is a very

mild-mannered rebel indeed,”

said Dominic Grieve, a former

Conservative lawmaker who

also voted to delay approving

the agreement. “He doesn’t

even really want to rebel. He

wants to vote for a deal.”

Mr. Letwin first worked in

government in the 1980s and

established himself as a fixer

who helped former Prime Min-

ister David Cameron forge a

political coalition with the Lib-

eral Democrats in 2010. During

his career he also displayed a

more eccentric side, once cam-

paigning dressed in a toga and

being caught throwing un-

opened letters from his con-

stituentsintoatrashcanina

park, an act for which he later

apologized.

Since the 2016 Brexit refer-

endum, Mr. Letwin has advo-

cated for the U.K. to remain as

close to the EU as possible af-

ter Brexit. On Saturday, how-

ever, he became the focus of

government vitriol in Parlia-

ment. Several government of-

ficials privately described him

in expletive-laden terms after

he presented an amendment to

Mr. Johnson’s Brexit deal that

forced the government to re-

quest a Brexit delay from the

EU to allow lawmakers more

LONDON—The tumult of
Brexit, has forged a new breed
of British political radical: the
establishment Conservative.
This weekend, Oliver
Letwin, a silver-maned for-
mer Conservative stalwart,
turned rogue law-
maker, launching a rebellion
that forced the government to
request a delay to Brexit.
Now the fate of Mr. John-
son’s deal with the European
Union sits in large part in the
hands of a cluster of estab-
lishment lawmakers, like Mr.
Letwin, who in many cases
dedicated themselves to the
Conservative Party for de-
cades but were ejected from
the party in September for
blocking an abrupt “no deal”
Brexit.
The Brexit divorce deal that
Mr. Johnson negotiated with
the EU last week faces yet an-
other crucial week of votes in
Britain’s parliament. The gov-
ernment will try to pass legis-
lation to turn it into British
law. But lawmakers could sty-
mie that effort or vote to
amend the deal, adding, for in-

BYMAXCOLCHESTER

Conservatives Who Fought

‘No Deal’ Become Big Deal

Mr. Tusk might decide to

summon leaders to another

summit to approve the request,

potentially a few days before

Oct. 31, as another way to en-

courage Parliament to back the

deal and avoid the threat of a

no-deal Brexit.

Mr. Johnson said in his let-

ter to Mr. Tusk that he would

attend such a summit to up-

date counterparts on Britain’s

progress.

If time looks too short to

approve the deal before

month’s end, leaders are

widely expected to grant an ex-

tension, although any decision

to do so must be unanimous.

They must then decide

whether to back a short, techni-

cal extension to allow both sides

enough time to ratify the agree-

ment or a longer one that could

allow Britain to hold a general

election or a second referendum

on the deal, something U.K. law-

makers could still demand.

One option for EU leaders is

to repeat the formula they

found to grant the second

Brexit extension in April: Al-

low for a longer delay but

open the way for Britain to

leave earlier if the ratification

process is completed. The deal

also needs approval of the Eu-

ropean Parliament, where law-

makers might vote on it

Thursday, a senior EU parlia-

mentary official said.

Mr. Johnson is expected to

bring back his withdrawal deal

for another vote Monday or

Tuesday. The prime minister

needs to persuade just nine

lawmakers who voted against

him on Saturday over the ex-

tension—and half-a-dozen of

them have said they would

back the new deal now that

the prospect of an accidental

no-deal exit is less likely.

If lawmakers approve the

deal, it would take further leg-

islative scrutiny to take effect.

Process

Faces New

U.K. Vote

Protesters cheered a vote by Parliament that triggered a law requiring the government to request a Brexit delay from the European Union.

SIMON DAWSON/REUTERS

Oliver Letwin was ejected from the Conservative Party along with 20 other lawmakers in September.

JESSICA TAYLOR/U.K. PARLIAMENT/AGENCE FRANCE-PRESSE/GETTY IMAGES