Prime Minister Johnson and His New Cabinet: No Deal Preparations and Tough Choices Ahead

Thursday, July 25, 2019 - 2:00am

As widely anticipated, former London mayor and UK foreign secretary Boris Johnson was elected the new leader of the Conservative Party and took office as Prime Minister yesterday. Johnson won with a clear mandate, securing 66% of the vote from Tory Party members. The U.S.-UK Business Council issued a statement congratulating Johnson, calling for strong U.S.-UK economic ties, and urging the government to avoid a no deal Brexit by any means necessary.

Johnson’s first order of business was to reshuffle his cabinet. Roughly two dozen Cabinet secretaries resigned, were fired, or retired. The new team has just 99 days to sort out the UK’s exit—unless another delay is agreed or a General Election is called before October 31. The timing is further complicated by the fact that the Parliament left for their August recess today, and won’t be back until September 3.

All the key players in the new cabinet are familiar faces, and virtually all are Brexiteers. A few observations:

Chancellor of the Exchequer: Sajid Javid (replaces Philip Hammond)

  • Promoted from Home Secretary to HM Treasury
  • Backed Remain in 2016 but now supports Brexit
  • Willing to threaten no deal in order to get a better agreement with the EU
  • First ethnic minority to run the HM Treasury
  • Expected to discard the current fiscal constraints and pursue major spending increases to boost no deal preparations and to fund domestic policy objectives like infrastructure investment.

Foreign Secretary/First Secretary of State: Dominic Raab (replaces Jeremy Hunt)

  • Major promotion, as this effectively makes him deputy PM
  • Committed Brexiteer
  • Poorly regarded in Brussels, seen as confrontational and less inclined to find common ground on key issues, though collaboration on Iran is likely to continue  
  • Will have limited oversight on Brexit per se, focusing instead on key foreign policy challenges, such as Iran and China

Home Secretary: Priti Patel (replacing Sajid Javid)

  • Leading Brexiteer and key voice in Vote Leave campaign
  • Fired by Theresa May as development minister for unauthorized actions
  • Will lead plan to institute a post-Brexit points-based immigration regime, to include an increased cap on skilled workers

Cabinet Secretary: Michael Gove (replaces David Lidington)

  • Moves from environment ministry to more senior position, coordinating policy across government
  • Will oversee stepped up no deal preparations

Secretary for International Trade Secretary: Liz Truss (replaces Liam Fox)

  • Moves from second in command at Treasury to lead UK trade negotiations
  • Backed Remain but now actively supports Brexit, including possible no deal
  • Committed to a post-Brexit U.S.-UK trade agreement and spoke in favor of a quick deal during a recent U.S. Chamber visit

Secretary for Exiting the EU: Steve Barclay (no change)

  • One of very few ministers to keep his job
  • Continues to call loudly for more investment in no deal preparations

Business Secretary: Andrea Leadsom (replaces Greg Clark)

  • Leadsom formerly served as May’s Leader of the House of Commons
  • She is an arch-Brexiteer; a huge shift away from Greg Clark’s pro-business pragmatism
  • One huge question: will Clark’s tradition of weekly meetings with business leaders to help plan for the real world consequences of no deal continue?

With such a slim governing majority, it is a serious gamble for Johnson to replace so many ministers with loyalists. If any two Conservative MPs decide to back a motion of no confidence rather than support a no deal Brexit, they could bring down the government and force a General Election. 

Johnson faces difficult challenges over the next 99 days.

  1. He must try to secure changes to the Withdrawal Agreement, most notably removing the Irish backstop. Brussels is unlikely to budge on this, and if the backstop remains, Johnson’s no more likely to secure a parliamentary win than Theresa May. Indeed, DUP leader Arlene Foster has said that a decision about whether to extend the confidence and supply agreement (which Johnson needs for a functioning majority) will hinge on ensuring no border in the Irish Sea and no divergence in treatment from the rest of the UK.
  2. Johnson must manage a dicey strategy among Tories. Will he abandon the two dozen hard-right MPs who will never support an agreement that keeps the UK closely connected to the EU, or will he abandon the roughly 25 MPs who will never accept a no-deal outcome? He cannot afford to lose the support of either group, so how does he walk that high wire?
  3. The Brexit Party will use by-elections and local elections to flex their muscle.  They want to “keep the prime minister honest” about his promise to leave with or without a deal by October 31. The LibDems also have grown strong, under an energetic new leader—Jo Swinson.

London likely will know by mid-September whether a deal is within reach. If not, they’ll reportedly communicate their intent to leave without a deal in order to give SMEs in particular time to prepare.

Given Parliament’s clearly demonstrated opposition to a no deal Brexit and the likely impossibility of negotiating a new Withdrawal Agreement, a General Election seems inevitable, though timing is unclear.

Discussions also continue to swirl about a vote of no confidence, though Johnson has made it clear anything less than formal legislation won’t be considered binding.

EU Reactions

Johnson will enjoy no honeymoon with Brussels. Donald Tusk sent him a terse note of congratulations on his “appointment” (not election). The PM’s maiden speech reportedly “lived down” to expectations in member state capitals. EU-27 unity remains strong: They will give the new team a “fair hearing,” but there’s no indication that they’ll budge from the current position (the deal on offer is the only one to be had). Johnson’s going in strategy to negotiate a new deal—offering a unilateral guarantee on citizens’ rights but withholding the payment of Britain’s divorce settlement—won’t win him friends on the continent.

Ireland will continue to communicate with London via Brussels. Solidarity among member states is seen as an existential question, and Dublin is desperate to avoid the backstop being traded away in any negotiation. Overall, it seems Dublin is more willing to accept a deterioration in relations with the UK than undermining their commercial ties with the EU.

Meanwhile, member state no-deal preparation continues and we can expect to see more coordination in the weeks ahead. Each capital will decide when to issue guidance to the business community on steps to ensure they are prepared for no deal.

The next European Council meeting is October 17, but if it becomes clear there is a way forward sooner than that, Tusk would convene an informal Council meeting.  Member states also likely would agree to another extension, though such a move would be politically toxic for Johnson, who’s said unequivocally that the UK is leaving October 31 with or without a deal.