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

Jim Edwards
Samuel Tombs Pantheon

Samuel Tombs / Pantheon

  • 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 referendum.
  • 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 correctly. 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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