The analyst who called the 2017 election exactly right says Theresa May could be forced to call a second Brexit referendum

Samuel Tombs Pantheon

Pantheon’s Samuel Tombs,
the macro bear who thinks economics might scuttle

Samuel Tombs /

  • Pantheon Macroeconomics believes there is a 40% chance
    that Prime Minister Theresa May will call a second Brexit
    referendum because she does not have enough votes to get Brexit
    through Parliament.
  • Remain could narrowly win the second
  • That might cancel Britain’s plan to leave the EU
    entirely, according to analyst Samuel Tombs.

LONDON — Theresa May does not have enough votes to get a “hard
Brexit” through parliament and this may force her to call a
second referendum on Britain’s final deal with the EU, according
to Pantheon Macroeconomics analyst Samuel Tombs. He puts the
chance of a second referendum at 40%, according to a note he sent
to clients yesterday. Because of that, he estimates there is “a
25% chance that Brexit doesn’t happen.”

The note is eyebrow-raising for two reasons: He is one of very
few UK analysts who think that a second Brexit referendum is in
any way likely. And he was almost alone in
predicting the result of the June 2017 general election
. Most analysts had assumed the prime minister would
maintain or increase her majority.

Tombs’ assumption is that macroeconomic conditions drive
politics in Britain. His successful 2017 election prediction was
based on the correlation between consumer confidence (which was
falling before the vote) and whether a sitting government gains
or loses seats in a general election.

Since then, he has argued repeatedly that no government can
withstand the economic pain of leaving the EU with a bad deal (or
a “hard Brexit”), and thus
politicians will cave and either choose a soft Brexit or weasel
out of leaving the EU entirely

He also argues that since the June 2016 referendum, Britain
appears to have changed its mind.
A consistent but small majority of voters polled now believe the
decision to leave was “wrong.”

polls suggest remains would win new referendum

Pantheon Macroeconomics

That said, here are the numbers that bedevil May’s government:

  • May’s technical House of Commons majority: 13
  • Rebel MPs needed to block the majority: 7
  • Votes lost by the government since June: 11
  • Theresa May’s pre-referendum position: Remain
  • Remain opinion poll lead since referendum: 2%-8%
  • Total Remain MPs in Conservative government: 176 of 317
  • Total hardline “Leave Means Leave” MPs in Conservative
    government: 50 of 317

The crucial pivot for all this is that the government lost a vote
that included an amendment to the Brexit bill in December. That
amendment now gives Parliament the right to vote on the Brexit
deal at the end of negotiations — all but assuring that any
deal will need to be soft rather than hard, or the entire project
risks being scrapped.

On those stats, Brexit simply doesn’t have enough votes to get
through the Commons unless it includes a deal that keeps the UK
closely aligned with the customs union and the single market,
Tombs says.

“It is becoming increasingly clear, however, that none of the
forms of Brexit that the EU is willing to tolerate can command
enough support from her own party’s MPs, or would please enough
of the population for the current government to stand a realistic
chance of winning the next election. Mrs. May might find that the
only way to break the log-jam and save her premiership is to
consult the country again,” Tombs says.

“Accordingly, a second referendum will become an appealing option
for Mrs. May towards the end of this year or in early 2019. It
would have to be held once she has negotiated a deal with the EU,
with the options presented to the public being accepting the deal
or staying inside the EU. She could claim that the first
referendum was held when the public didn’t have the full facts,
and she could argue that the decision was so momentous that the
public should be allowed to voice their opinion again. It’s not
guaranteed that parliament would vote for a second referendum—at
present, Labour does not advocate one—but it would be hard for
MPs to claim that the public should be prevented from having
another say.”

Tombs ranks the probabilities like this:

  • Chances of …
  • Another referendum: 40%
  • Brexit is cancelled: 25%
  • Soft Brexit: 40%
  • Canada style hard Brexit: 25%
  • No deal, cliff-edge Brexit: 10%

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