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October 30, 2019

Brexit Update: U.K. General Election Set for 12 December 2019

The United Kingdom's (U.K.) exit from the European Union (EU) has been delayed until 31 January 2020, prolonging uncertainty for individuals and businesses on both sides of the Atlantic. The U.K. Parliament has decided to use this time to hold a general election in December.

The 'Flextension'

As discussed in our update last week, the U.K. Prime Minister was required by Parliament to seek an extension to the Brexit process.

Yesterday, the EU Council announced their formal decision to grant a 'flexible extension' to 31 January 2020, which was the date requested by the U.K. Parliament. The extension is flexible because the U.K. could leave the EU before that date if the Withdrawal Agreement Bill is passed. Since the exit day is now 31 January, the risk of a 'no-deal' exit still exists, although it is postponed.

The General Election

After the Prime Minister and the EU reached a new deal on 17 October 2019, the deal was voted on by the House of Commons where it passed the first stage in Parliament. However, the Government's plan for an expedited timetable for passing the Bill was rejected on the basis that it did not give sufficient time for Parliament to scrutinize (and possibly amend) some of the most contentious aspects of the deal. The Government paused the Bill's progress in Parliament, saying they would rather have an election to try to get a majority in the House of Commons to pass the Bill without amendment.

In response, Parliament has just passed the legislation to hold a general election on 12 December 2019.

What Happens Now

All progress on Brexit is on hold until the new Parliament is elected. As a result, there will be no concrete resolution to Brexit in the short term, with prolonged uncertainty.

The next steps for Brexit will depend on the outcome of the election. If the current Prime Minister, Boris Johnson, wins a majority, he will likely get his deal through, and the U.K. will leave on or before 31 January. If he does not, then depending on the relative strength of the parties and the makeup of Parliament, Brexit could take different paths: a 'softer' Brexit, a 'no-deal' Brexit or no Brexit at all.

For U.S. businesses this means that Brexit planning should remain on their list of priorities for 2020 and close attention should be paid to the outcome and aftermath of the December election.

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