Reacting to Wednesday night’s embarrassing defeat in the second chamber, the Government described the result as “disappointing” while sources confirmed they intended to reverse the result when the Bill returns to the Commons.
The confirmation came as campaigners opposed to a so-called “hard Brexit” obtained legal advice stating that Britain’s “actual withdrawal” from the EU will have to be authorised by a fresh act of Parliament.
It also came as the head of the Confederation of British Industry (CBI) warned leaving the EU without a deal and reverting to World Trade rules would open a “Pandora’s Box of economic consequences”.
Peers voted overwhelmingly in favour of a cross-party amendment to the Government’s Bill, backing the motion to guarantee the rights of EU nationals living in the UK by 358 votes to 256.
This means the legislation to pave the way for triggering Article 50 will have to go through the process of ping-pong between the Lords and Commons chambers before Theresa May can proceed with plans to begin formal talks.
But despite the setback, ministers are confident they remain on course to meet the Prime Minister’s deadline for invoking Article 50 at the end of March. And the Government has repeated arguments that while it wants to secure the future rights of EU citizens in the UK, it needs to be able to secure reciprocal rights for British citizens living in the EU at the same time.
Meanwhile, in a keynote speech in the City of London, CBI president Paul Drechsler warned that British firms would face tariffs on 90 per cent of their exports to the EU without an agreement and a raft of new regulatory hurdles. He said that while some businesses are already preparing for such a “worst case scenario”, others are unable to do so because the costs were too high.
He stated that businesses on both sides of the Channel are concerned about the implications for future trade if the Government is unable to reach a deal with the remaining 27 member states. “We should be under no illusions about what this would really mean. A ‘no deal’ scenario would open a Pandora’s Box of economic consequences,” he said.
While Mrs May has expressed her determination to secure an agreement, she has also made clear that “no deal is better than a bad deal”. Mr Drechsler said such an outcome would affect firms across the economy, whether they were “a salmon farmer in Scotland, an aerospace giant in the Midlands or a tech start-up in Cambridge”.
“Getting a ‘smooth Brexit’ which minimises disruption across the Continent is in everyone’s interest,” he said.
The EU (Notification of Withdrawal) Bill will return to the Lords for report stage next week. In a bid to stiffen opposition among peers, the Open Britain campaign group has circulated details of legal advice it has obtained from three leading QCs that claims “actual withdrawal” from the EU will require a “full act of Parliament” once the terms of any deal are known.
Labour MP Chuka Umunna warned ministers could face another court battle unless they were prepared to amend the current legislation.