Class Dismissed: The commercial spillovers of prorogation

September 2, 2019

2 min read

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What's going on here?

The effects of prorogation are not only present in constitutional and judicial debates, but also in the legal marketplace, as no deal Brexit becomes more probable and legislative scrutiny comes to a halt.

What does this mean?

The government, led by prime minister Boris Johnson, has been granted permission by the Queen to prorogue, i.e. suspend, the Westminster parliament from a day between 9 and 12 September and 14 October.

Johnson justified the prorogation by pointing out the current parliamentary session has been unusually long, and that “key Brexit legislation has been held back to ensure it could still be considered for carry-over into a second session”.

Nevertheless, given the timing, on the 31st of October Britain is due to leave the European Union, and the length, five weeks, there are concerns that the government is acting in a partisan way, or even unconstitutionally, since it moved to prorogue Parliament when it is aware that it may be facing a no confidence motion.

Why should law firms care?

Prorogation might seem an abstract constitutional matter but the practical impact on the legal market is fundamental, apart from the legal interest that lies in the judicial review petitions that are already being filed in London, Belfast and Edinburgh.

Prorogation makes no deal Brexit, even more probable. This is because the only ways to stop a no deal Brexit requires the government to convene. There are three ways in which Brexit with a deal can happen. Firstly, MPs can pass legislation which mandates Johnson to have an extension of Britain’s membership after October the 31st, whether he gets a deal or not. Secondly, MPs can pass a motion of no confidence in the Johnson administration. For this, they need to get 50% plus on their side. This would then open up a two-week period in which a new caretaker government could be formed to introduce an extension. Lastly, but not least, Johnson and the EU might agree a deal, having overcome first the hot potato of the Irish backstop. However, prorogation makes all of these options more improbable.

On top of that, once Parliament is prorogued, most parliamentary business comes to an end and any unfinished business falls. This means that in the next session only the government bills that have the agreement of representatives of the main parties will be considered. Furthermore, motions fall, and no new bills or motions can be introduced.

Therefore, the market shift out of Britain and into mainland Europe will be enhanced, UK exposure will be reduced, investors will pull even more than the £1.9bn already pulled and property funds are predicted to be further hit. The need for legal consulting becomes more pressing than ever.

Report written by Vasiliki Poula

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