If you somehow missed it, the U.K. Supreme Court finally announced its much-awaited ruling yesterday.
As a result, the pound got a volatility infusion. And here are some of the key questions and answers that you need to know about.
What was the ruling?
In an 8-3 vote, the Supreme Court ruled against the government by affirming by the High Court’s ruling that an Act of Parliament is indeed required before government ministers can give Notice that the U.K. is formally withdrawing from the European Union.
I won’t be discussing the Supreme Court’s rationale for its decision, but if you’re interested, you can read the mind-numbing 96-page judgement in full here. Alternatively, you can read the 3-page press release here.
Moving on, the government’s prerogative to trigger Article 50 of the TEU without Parliament’s approval wasn’t the only issue raised to the Supreme Court.
The other major issue was the so-called “devolution issue” that refers to the question on whether Theresa May’s government needs to consult and have the approval of the devolved legislatures of Scotland, Wales, and Northern Ireland.
And the Supreme Court unanimously decided on that issue by saying that Theresa May’s government has no “legally enforceable obligation” to do so. Right, so only legislation from Parliament is all that’s needed. Got it!
What happens next?
So, where do we go from here? Well, in his Commons statement yesterday, Brexit Secretary David Davis said that we can expect a Bill to get parliamentary approval to start the actual Brexit process “within days“.
And according to an unnamed source being cited by the The Daily Telegraph, a Bill could be ready by Thursday, and that it would likely be called the “European Union Withdrawal Bill.”
The Bill would then have to pass through the House of Commons, which could be done in “a fortnight” or a two-week period, according to the The Daily Telegraph.
If that does happen, then that would give the House of Lords enough time to deliberate on it and then turn it into law before the end of Theresa May’s March 31 deadline.
Will the House of Commons support the Bill?
Very likely. As a refresher, Theresa May (back in December 7, 2016), forced the House of Commons to vote on whether they would support invoking Article 50 of the TEU by March 31, 2017.
And the end result was an overwhelming 461-89 vote in favor of triggering Article 50 by March. December’s vote was non-binding, though, but it does show that support appears to be strong.
Any chance of a delay?
The Supreme Court said that the form of legislation required is “entirely a matter for Parliament,” adding that a Notice “could no doubt be very short indeed, but that would not undermine its momentous significance.”
And to that end, David Davis said in his speech that the Brexit Bill will be “straightforward“.However, when David Davis was grilled during the Q&A portion after his speech, he relented and said that Parliament will have “great influence” and “many, many, many votes” during the Brexit process, adding later that the planned Brexit Bill will be designed to allow for “substantive” amendments.
So delays are indeed possible as anti-Brexit MPs haggle for such amendments.
How did the pound react?
The ruling against the government is good for the pound because it would allow anti-Brexit MPs a chance to try and avoid a so-called “hard” Brexit, so the pound initially spiked higher as a knee-jerk reaction, likely because pound bulls who were late to the party decided to jump in.
After that, the pound began to slide lower, very likely on profit-taking on a “buy the rumor, sell the news” scenario.
After all, expectations were already very high that the government would lose the case, especially after reports began circulating two weeks ago that government ministers were expecting and preparing for a defeat.
The pound was then pushed even deeper into the red after Scottish First Minister Nicola Sturgeon warned that a second Scottish independence referendum was becoming “ever clearer” after learning that approval of devolved legislatures are not needed to trigger Article 50.
Also, David Davis initially implied that the Brexit Bill would be hard to amend, which likely helped to propel the pound lower.
However, when Davis said that Parliament would have “great influence” in the Brexit process, the pound’s bleeding noticeably stopped and the pound got bid up again, likely because hope for a “softer” Brexit got rejuvenated.