What High Court Brexit ruling means for you

High Court rules that Parliament should get a vote on Brexit

Updated: 
Britain Brexit Lawsuit

The High Court has ruled that the government can't unilaterally trigger Article 50 of the Lisbon Treaty - the first step in the UK leaving the EU. It decided that the government would have to consult parliament first, and let it vote on Brexit. So is this good or bad news for our finances?

The question of what it means for us depends on whether it effectively changes the approach the government has decided to take. At the moment, Theresa May has made it clear she wants a 'hard' Brexit of going it entirely alone - securing the borders and negating a myriad of trade deals with individual nations.

Hard Brexit: no change

The government reacted quickly to the ruling, announcing that it would be appealing against it. A government spokesperson said: "The government is disappointed by the Court's judgment. The country voted to leave the European Union in a referendum approved by Act of Parliament. And the government is determined to respect the result of the referendum. We will appeal this judgment."

This battle will go to the Supreme Court in December. There is a chance that it upholds the High Court ruling, in which case it's not known whether the government would be able to take the case to the European Court of Justice, but we can't rule it out.

At either of these stages, the government could win the vote, and Theresa May would get to stick with her hard Brexit plan. We could then expect the pound to remain in the doldrums, and inflation to remain relatively high.

There has been plenty of disagreement over what this would mean for the economy, as it would depend on the trade agreements the UK could establish, and the speed at which they could do so. There's a risk that delays could mean a slowdown in the economy, and some have even suggested a possible recession.

No Brexit

If the government fails to overturn the decision, and ends up needing to pass an Act of Parliament, then theoretically there's a chance that MPs vote against triggering Article 50, and Britain would remain committed to staying in the EU.

This would eventually mean an unwinding of the market changes that have taken place since the referendum result. It wouldn't be overnight, but we can expect a recovery in the pound, a rise in consumer confidence, and a fall in the stockmarket (because FTSE 100 companies have benefited from the falls in the value of the pound because they make so much of their money overseas).

However, this doesn't seem particularly likely. It would certainly be difficult for many MPs to defy the results within their constituencies and vote against something that the majority of voters decided they wanted.

Softer Brexit

If the debate and vote end up going ahead, a more likely outcome would be a vote in favour of triggering Article 50 - but with strings attached. There's a chance that plenty of deals will be done among MPs in order to secure their support for leaving the EU. The Conservatives don't have an enormous majority, so Theresa May will have to ensure the support of almost all of them.

Staunch 'Remainers' within the Conservative Party may agree to support triggering Article 50 as long as they can have a say in how Brexit plays out, and this is where we are likely to see her having to be a little more flexible on how hard Brexit is going to be.

May could end up compromising on her insistence that there be no freedom of movement, and may have to accept the aim of keeping close ties with the EU.

What we do know

There are plenty of things we don't yet know. The only certainty is that this vote has triggered yet more uncertainty. This in itself is likely to mean yet more volatility in the markets. Richard Stone, Chief Executive of The Share Centre says: "As with any event, all personal investors really want is clarity and certainty. To that end, they will be disappointed by the High Court ruling on the triggering of Article 50 as it is likely to lead to increased delays, uncertainty and market volatility. Indeed Sterling has risen sharply and share prices have fallen following the judgement."

This kind of volatility can be worrying, but the advice from the experts is to sit tight, and not to panic. There are plenty more twists and turns to come in the Brexit saga, so the best approach is to screen out the noise, and invest for the long term.