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Brexit: Where we go from here

While Parliament is suspended until Oct. 14, there is likely to be no shortage of maneuvering in the coming weeks as the U.K. hurtles toward its latest Brexit deadline on Oct. 31.

What happens next?

Despite protestations from Prime Minister Boris Johnson, Parliament has sought to take control of the process, passing a law to force him to seek a further delay to the Brexit deadline.

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Parliament wants a deal, which has been underscored by a mass revolt of Johnson's former colleagues — including his own brother — rebelling against his tactics which they fear will result in the U.K. leaving Oct. 31 without an agreement.

If neither a deal or no-deal scenario is approved by MPs by Oct. 19, the prime minister will have to seek an extension to talks. Johnson has made clear his hopes to hammer out an agreement at an Oct. 17-18 gathering of the EU Council, but has also threatened to ignore the delaying bill, effectively breaking the law.

Despite being the default legal option without an agreement, for now at least a no-deal scenario appears to be off the table following Parliament's intervention. However, were the EU to refuse an extension — as has been threatened by some leading European figures — the U.K. would leave Oct. 31.

"The EU also has a say, but so far its strategy has been to avoid the blame for no deal. So if the U.K. asks, then the EU is likely to agree, though possibly with conditions and a date of its choosing," said Jill Rutter of think tank Institute for Government.

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The government could potentially dust off former Prime Minister Theresa May's withdrawal agreement and take it back to Parliament, following comments from some MPs who rejected the bill the three times May brought it to the house, but could now support it in preference to no deal.

But May's agreement is anathema to Johnson and his supporters, particularly the "backstop" element, which would keep Northern Ireland in a temporary customs union with the EU but would prevent the need for a hard border with Ireland.

Referendum or election?

Should the EU agree to an extension — which Berenberg's economics division gives an 85% likelihood of — the current makeup of the House of Commons has not shown it can reach an agreement on how to proceed. The only apparent ways to alter the formula are to introduce new parliamentarians through a general election, or throw the question directly back to the public with a second referendum.

Labour party leader Jeremy Corbyn has consistently called for a general election, yet turned down the chance when Johnson sought to bring one about last week. Due to the U.K.'s fixed parliament act, the government required the backing of 66% of the house to call an early election, which could have stymied the Brexit extension bill as Parliament would have been dissolved for the election.

Corbyn has said that once the extension is secured he will back an election, despite the lowly polling performance of his party. However, senior Labour figures, including Labour's deputy leader Tom Watson, instead back a second referendum.

"[If] a snap election before Brexit is agreed it would be a referendum 2.0 with a de facto choice between a hard Brexit and a proper second referendum on whether the U.K. should leave the EU," wrote Kallum Pickering, senior economist at Berenberg.

Coalition scenarios

The latest YouGov polling shows the Conservative party leading on 32%, with Labour (23%), Lib Dems (19%) and the Brexit Party (14%) trailing, suggesting an outright majority for any party is unlikely.

A Conservative-Brexit Party coalition has been mooted, although Johnson this week rejected the offer of a nonaggression pact from Brexit Party leader Nigel Farage, which would have meant the two parties not facing each other in certain strategic seats. Were the two to form a government a hard Brexit scenario would seem almost certain, with the Brexit Party campaigning for a "clean-break Brexit."

Labour has said that if it wins the election it will call for a second referendum and back remain, but the party is struggling in the polls having been indecisive in its Brexit strategy and hemorrhaging remainer votes to the Liberal Democrats.

If, in a colossal shock, the remain-backing Liberal Democrats could capitalize on a rebound in public opinion and win a majority, leader Jo Swinson has pledged to revoke Article 50 and keep the U.K. in the EU. If they lose, however, they will back a second referendum.

Neverendum

Backers of a second referendum have not yet specified what the question would be this time around. A straight in/out would now have to specify that "out" would mean no-deal Brexit or Brexit with a deal, most likely May's withdrawal agreement. "Remain" would likely also have to be on the ticket.

A potential remain vote would then open the question as to whether or not the vote was decisive.