Ugly battle looms in UK politics

Boris Johnson's proposal to suspend parliament for up to a month in a bid to stop MPs from launching legislation to block a no-deal Brexit has abruptly broken the relative sense of calm during this summer's recess.

An "ugly battle" now looms "between the new pro-Brexit government and the lower house," said Richard Falkenhäll, senior FX strategist at SEB.

Follow along as the FT follows the tick-by-tick developments of a big day in Westminster politics. Have thoughts on the subject or want to give us your input on what you'd like to read more about? Comment in the discussion section.

A fresh blow for the pound

Markets have reacted sharply to the Johnson government’s move to suspend parliament, sending sterling lower and investors reaching for the traditional safety play of British government bonds.

The pound fell as much as one per cent on Wednesday morning, before recovering slightly to trade 0.7 per cent lower and hover around the $1.22 line.

The leg lower came after the currency has slightly recovered from near-historic lows in the latter half of this month as investors had broadly welcomed opposition plans to frustrate a no-deal exit.

UK 10-year gilt yields fell five basis points to 0.453 per cent as investors moved into the debt.

Philip Hammond warns over 'profoundly undemocratic' step

The surprise manoeuvre by Boris Johnson has thrown Remainer MPs off balance. In Westminster the air is thick with cries of anger from figures who oppose a no-deal Brexit, writes the FT's chief political correspondent Jim Pickard.

The fury is not confined to opposition MPs. Philip Hammond, who was Conservative chancellor until only a few weeks ago, said the move to shut down parliament would be “profoundly undemocratic”.

“It would be a constitutional outrage if parliament were prevented from holding the government to account at a time of national crisis,” he said.

David Gauke, who was justice secretary under Theresa May's administration, described the situation as a "dangerous precedent".

"Imagine that Jeremy Corbyn is PM, pursuing a policy that is unpopular in Parliament & in the country. At a crucial moment he finds a way to evade Parliamentary scrutiny for several weeks," he said.

MEPs lob criticism at Boris Johnson

In Brussels, MEPs across the political spectrum have criticised Boris Johnson's decision to prorogue parliament, writes Mehreen Khan. Guy Verhofstadt, the European Parliament's Brexit chief, tweeted that it was a "sinister" move that would not help future EU-UK relations:

Nathalie Loiseau, a French En Marche MEP, asked if there was a "disease" afflicting British democracy.

However not all EU voices think Mr Johnson's move is bad news. One official told the FT that the gambit might pay off should the prime minister extract concessions from EU leaders over the backstop at a European Council meeting on October 17 and holds a meaningful vote.

"Parliament has had over two years to debate this deal. It's now the time for action", said the source.

How much time will MPs really lose?

We should not forget that every year MPs decamp from Westminster for the three-week conference season in late September, writes Jim Pickard. So the question is: how many more days of Parliamentary time are being kiboshed by Downing St?

In reality it is probably half a dozen days. Normally the Commons would break up for conference season on September 16, which will now probably happen earlier on September 10 or 11. Meanwhile MPs will not come back on October 7 but instead will return for the Queen's Speech on October 14.

The loss of six or so days may not sound like a lot, but it could be enough to undermine attempts by opposition parties to use a legislative route to force Boris Johnson to seek an extension to Article 50 - and thus a delay to Brexit.

Yesterday there was a meeting of Labour, the SNP, Plaid Cymru, the Liberal Democrats, the Independent Group and the Greens. They announced that they had agreed to use legislation to try to block No Deal, instead of the more dramatic and risky option of a "vote of no confidence". Now that strategy seems to be in tatters.

No-confidence vote still most probable scenario — ING

Analysts at Dutch bank ING reckon that despite the prime minister's latest move, the most likely outcome remains a no-confidence vote, triggering elections.

"'No deal' has become more likely, although we still narrowly think a no-confidence vote, which leads to an Article 50 extension and early elections, remains the most probable scenario," says James Smith, developed markets economist at ING.

"Despite all the noise over the past week, we’re inclined to say the government’s ‘Plan A’ is still to seek a revised deal with the EU."

ING has sketched out this handy diagram as to different likelihoods of where we go from here:

Legal bid to block Johnson proposal planned in Scotland

Backers of a legal effort to challenge the constitutionality of suspending of parliament to force through Brexit said on Wednesday they were seeking to get Scotland’s highest civil court to block Mr Johnson’s prorogation bid, writes Mure Dickie in Edinburgh.

The Court of Session in Edinburgh agreed this month to hear on September 6 the cross party petition brought by more than 70 MPs and peers of the UK parliament and backed by the Good Law Project set up by anti-Brexit barrister Jo Maugham.

“We have filed a motion asking the Court of Session to suspend the prime minister's request that Parliament be suspended,” Mr Maugham tweeted.

Joanna Cherry, the Scottish National party MP who heads the petition, said backers wanted the court to “look at what’s proposed ASAP”.

The legal case is being brought in Scotland because the Court of Session sits throughout August, unlike the High Court in London — which is in recess until the end of next month. A ruling on the petition would be likely to be appealed to the court’s inner house and then the UK Supreme Court.

Boris Johnson is forcing the hands of no-deal Brexit opponents

Boris Johnson is forcing his opponents to face a hard but simple fact. If they want to stop him from pushing through a no-deal Brexit they are going to have to bring him down, and quickly, writes Robert Shrimsley, FT editorial director. By announcing plans to suspend parliament for up to five weeks the UK prime minister has shown he is ready to provoke a full constitutional crisis.

The fury of his opponents is unmanufactured. The Speaker of the House of Commons, John Bercow, will have spoken for many MPs when he referred to the prime minister’s gambit as a “constitutional outrage”. It may be legal but it is certainly an extreme step designed to run down the clock and stop parliament asserting its will.

Read the Instant Insight column by clicking here.

Downing Street: this is about delivering the Johnson agenda

The steer from Downing Street - which you might want to treat with a pinch of salt - is that today's surprise move is not about cutting off Remainers at the knees, writes Jim Pickard.

Instead, it's all about the new prime minister delivering his domestic agenda as soon as possible through an early Queen's Speech. (We haven't had a Queen's Speech since 2017, just after the last general election.) This will allow Mr Johnson to set out measures on tackling violent crime, investing in the NHS, improving education and addressing the cost of living.

The PM wrote to MPs this morning arguing that parliamentary business had been "sparse" for some time. It had lasted for 340 days, making it the longest session in 400 years. "I therefore intend to bring forward a new bold and ambitious domestic legislative agenda for the renewal of our country after Brexit," he wrote. But there's no doubt that the side-effect of this action is to potentially thwart what Number 10 sees as "sabotage" by the opposition parties.

Johnson is 'playing two chess games', EU diplomat says

One EU diplomat highlighted how Boris Johnson’s prorogation move would raise the stakes even further for the regular summit of European leaders later in the week of the Queen’s Speech planned for October 14, writes Michael Peel.

“It’s definitely a domestic move first and foremost. But he’s playing two chess games simultaneously,” the official said.

The diplomat said the announcement appeared to be part of a phased but risky approach by the UK premier that might increase prospects for a deal – and would also attempt to spread the blame around if things went wrong.

According to this argument, in the first stage, Mr Johnson proclaimed he was serious about exiting without a deal if necessary. In the second, he stressed to fellow European leaders that he wanted to reach an agreement if possible – a message he conveyed to Donald Tusk, European Council president, when the two met at the just-concluded G7 summit in the French coastal resort of Biarritz.

The third step – pressed forward by Monday’s prorogation announcement – would be to try to shift the EU27 from its position that it is solely up to the UK to come up ideas to break the impasse and avoid a no-deal Brexit.

“He’s signalling to the EU that ‘we are in it together’,” the diplomat said. “He wants to get away from this idea that the ball is in the UK court – and at least put it in the middle of the court instead.”

Calls to 'occupy parliament' to protest Johnson proposal

The backlash to Boris Johnson’s decision to prorogue parliament for five weeks is well underway, with those opposed to his plans voicing their opposition.

An online petition has already drawn a quarter of a million signatures, writes Sebastian Payne. Several prominent Labour MPs, meanwhile, objected to the plans and have called for parliament to be “occupied”, even though they are sitting parliamentarians.

Clive Lewis, shadow Treasury minister, has called for “an extraordinary session of parliament”, although parliament is set to return on September 3 anyway. “The police will have to remove us from the chamber. We will call on people to take to the streets.”

Dawn Butler, the shadow women and equalities minister, has made a similar plea. “No matter how you voted. Boris can not be allowed to close parliament. I along with my colleagues will occupy parliament.”

Left wing activists are calling for people to take to the streets. Owen Jones, the Guardian columnist, has called for people to assemble this evening on College Green near parliament to “stop the coup, defend democracy.”

But it is in fact too late. Jacob Rees-Mogg, leader of the Commons, and chief whip Mark Spencer flew up to Balmoral this morning for a meeting of the Privy Council with the Queen. The decision has been taken, the only way it could be reversed is if Her Majesty made the unprecedented move to go against her government.

What now for MPs hoping to block a no-deal?

So where does this leave the rebel alliance after what seemed like such a promising start yesterday? Not in a great place, Jim Pickard writes.

The six parties agreed yesterday to meet within 48 hours but (as of this moment) no meeting has yet been nailed down. One opposition figure said the Johnson manoeuvre had thrown into chaos the plan to block no-deal through the legislative route. That plan - based on the "Cooper-Letwin bill" from earlier in the year - would require several days of Parliamentary time in both the Commons and the Lords.

“It seems that we’ve probably been snookered somewhat, he’s come up with this decisive, quite scary action,” she said.

“It seems difficult to stick to the plan unless we can move extraordinarily quickly next week. The big question is now whether we need to do a vote of no confidence instead.”

But some Labour MPs believe that they can still stick to the current plan to use legislation next week to bind the prime minister to requesting another extension to Article 50, delaying Brexit - despite the painfully tight timetable. One pointed out that even if the legislative route failed, a vote of no confidence could still be used as the fallback option: it could take place after the suspension is lifted in mid-October – albeit just days before a potential No Deal.

The only problem with a vote of no confidence? It would need about 8 Tory MPs to think the virtually unthinkable and vote down their own government, with the potential consequence of a quasi-Marxist Labour government led by Jeremy Corbyn.

Rising concern over no-deal Brexit

Boris Johnson's plan to suspend parliament has lifted the risks of a damaging no-deal Brexit, economists at Capital Economics have warned.

Paul Dales, the firm's chief UK economist, said:

The prime minister’s decision to suspend parliament from sometime in the second week of September until 14th October increases the downside risks to the economy and the pound by decreasing the chances of a further delay to Brexit and increasing the chances of a no deal Brexit on 31st October.

UBS Wealth Management disagreed with that sentiment:

In our view, the risks of a no-deal Brexit on October 31 have not increased, but it should bring the situation to a head sooner. Meanwhile, sterling assets are likely to remain volatile.

The growing sense of uncertainty is reflected in the market for UK government debt. The 10-year Gilt is rallying the most since mid-July today, pushing the yield lower. Lower yields signal expectations both for lower future growth and potentially rate reductions from the Bank of England.

What is Boris Johnson seeking to do by suspending parliament?

Wondering what exactly Boris Johnson's plans are (and whether there should be 'constitutional outrage' over them)? We were too.

Here's a helpful Q&A written by George Parker and Jim Pickard.

Donald Trump praises 'great' Boris Johnson

Donald Trump has weighed into the debate on whether Jeremy Corbyn should bring forward a no confidence vote in the Johnson government, writes Sebastian Payne.

The US president has just tweeted:

“Would be very hard for Jeremy Corbyn, the leader of Britain’s Labour Party, to seek a no-confidence vote against New Prime Minister Boris Johnson, especially in light of the fact that Boris is exactly what the U.K. has been looking for, & will prove to be “a great one!” Love U.K.”

Given that Mr Corbyn has consistently expressed a strong dislike for the president and his policies, he is essentially egging him on to bring forward a vote. As Jim Pickard reported earlier, Labour is still focused on the legislative route to stop no-deal Brexit and is not considering a confidence vote right now.

Have we reached the ‘do not touch point’ for UK assets?

London’s major stock market had been enjoying this period of sterling weakness, as it is packed with multinational companies whose earnings are flattered by the currency’s fall. But the FTSE 100 is on track for its worst month in four years this August, and Seema Shah, chief strategist at Principal Global Investors, thinks we might be at a turning point.

"Company fundamentals remain broadly strong so the implication is that global investors have finally reached the “do not touch” point for UK equities. We appear to be at the limits of what the FX markets can do for companies, with the economic clouds beginning to shut out the rays of light afforded by a weak currency."

Derek Halpenny, head of global markets research in Europe for MUFG, said a no-deal exit is looking more likely. “Sterling downside risks will continue to plague the market,” he added.

Charles Hepworth, an investment director at fund manager GAM, is also bearish:

“Soggy politics and an ineffective opposition means UK risk assets still are for the brave (or foolhardy).”

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Queen approves Johnson proposal to suspend parliament

It's official.

Queen agrees to Johnson's request

Parliament will be prorogued, the Queen has announced. After a visit from the leader of the Commons Jacob Rees-Mogg, leader of the Lords Natalie Evans and Commons chief whip Mark Spencer, the Queen has agreed to Boris Johnson’s request to start up a new parliamentary sitting, Seb Payne writes.

The royal orders - approved at Balmoral - state that parliament will be prorogued “no earlier than Monday 9th September and no later than Thursday 12th September”, meaning that it will retire sometime early the week after next. The statement also confirmed parliament will return in five weeks time on October 14, with a Queen’s Speech setting out Mr Johnson's legislative agenda.

Boris Johnson's Brexit timeline

The FT's political editor George Parker on how this autumn is likely to shape up in Westminster:

September 3 - MPs return to Commons after the summer break. Big question for Boris Johnson's opponents: do they legislate to stop a no-deal Brexit or move a vote of no confidence to try to topple him?

September 9-10 - Parliament suspended - or prorogued - ahead of the Queen's Speech on October 14. Party conference season starts.

October 14 - MPs return to Westminster for Queen's Speech.

October 17-18 - European Council Brussels. The crucial moment when it becomes clear if Mr Johnson intends to take Britain out of the EU with a deal or no deal.

October 21-22 - Mr Johnson promises MPs votes on Brexit strategy. Time is running out for MPs to vote down the government if a no-deal exit is imminent.

October 26-27 - MPs could work through the weekend to enact a revamped version of Theresa May's withdrawal treaty - if Mr Johnson has negotiated a deal in Brussels.

October 31 - Mr Johnson's "do or die" Brexit day

November 7 - Downing Street is eyeing this date for a possible "the people versus parliament" general election, if MPs succeed in stopping Brexit.

Plurality of Brits in new poll against suspending parliament

Nearly half of Brits polled in a YouGov snap survey have rejected Boris Johnson's plan to suspend parliament.

Here's a quick breakdown of the views of the general public a few hours after the news of Mr Johnson's proposal broke:

· Is not acceptable 47 per cent
· Is acceptable 27 per cent
· Don't know 26 per cent

And here is polling based on party affiliation:

Rudd and Hancock in an awkward spot

The decision to suspend parliament puts two of Mr Johnson's senior ministers in an awkward position.

Matt Hancock, the health secretary, and Nicky Morgan, the culture secretary, had both previously ruled out proroguing parliament as a legitimate tactic, but are now serving under a government which has gone down that exact path.

In a June interview with Sky News, Ms Rudd said suspending parliament would be "absolutely outrageous".

"To consider closing parliament...is the most extraordinary idea I have ever heard," she said.

It is a ridiculous suggestion to consider proroguing parliament. For a start it would involve approaching the Queen, and nobody should consider doing that."

Mr Hancock in June tweeted a letter to other Tory leader contenders in which he said suspending parliament "is neither serious nor credible."

Friends of Mr Hancock are pointing out that in his letter, the health secretary stated he was against proroguing to push through no deal, but the government is in fact proroguing to provide a landing zone for a deal after the October EU council, as well as pursuing its domestic agenda.

Deutsche Bank says PM 'engineering' no-deal Brexit is most likely strategy

Boris Johnson's political strategy is "likely" to push for a no-deal Brexit, according to economists at Deutsche Bank.

Oliver Harvey, a strategist at the German lender, said the political arithmetic in Westminster and Brussels is such that Mr Johnson will probably pursue a no-deal Brexit on Halloween followed by snap elections.

He explains:

In our view, there is room for compromise on the backstop. The EU27 would be willing to entertain additional guarantees concerning the backstop, including possibly a time limit. But the UK government demands the backstop is removed altogether.

This is a step too far for the EU27, as it would involve both undermining the integrity of the Single Market as well as compromising the interests of a member state (the Republic of Ireland).

At the same time, we also see the room for the Johnson government to change direction on the backstop as limited. Mr Johnson's pledge to remove the backstop has still not been sufficient to win the committed support of either hardline Brexiteers within his own party, or the Brexit Party, who would prefer the entire Withdrawal Agreement is scrapped or renegotiated (or the UK leaves without a deal).

As a consequence, the political downsides for a last minute compromise with the EU27 are clear. Should Mr Johnson u-turn on the backstop, he faces the prospect of possible defections to the Brexit Party from his own MPs, and a resulting general election in which the Conservatives lose substantial vote share to the same party.

We retain our view that the most likely political strategy being pursued by the UK government is in fact to engineer a no-deal Brexit at the end of October, followed by a snap election.

Traders bet on more volatility to come

Sterling has recovered some of today's earlier steep losses, and is now trading 0.5 per cent lower on the day. But investors are preparing for an unnerving ride in the foreign exchange markets over the coming months.

In the options market, traders can place bets on future exchange rates. Those trades show expectations for sterling volatility over the next three months have hit their highest level since the start of the year, when former prime minister Theresa May was trying to get her Brexit deal through parliament.

“The pound appears to be taking the strain of any news flow related to Brexit and we would expect the volatility to continue,” said Georgina Taylor, a fund manager at Invesco.

You can read more on that story here.

Former Finnish PM 'sad to see what Brexit has done to UK democracy'

Former Finnish prime minister Alex Stubb took to Twitter to register his dismay at Boris Johnson's move. He said he was "really sad to see what Brexit is doing to one of the great democracies of our time" and urged the UK to "stay calm and use common sense", writes Jim Brunsden.

Mr Stubb, who last year unsuccessfully sought the centre-right nomination for European Commission president, was one of the UK's staunchest political allies during his time in office but has also been outspoken in his criticism of Brexit, which he has warned could do more damage than the 2008 collapse of Lehman Brothers.

Suspending parliament is 'bad government'

A former head of the civil service has said the government's actions "corrode the trust" in Britain's institutions and its democracy.

Lord Kerslake, who has been a critic of a no-deal Brexit, told Sky News "this is a reckless and divisive act by the prime minister."

I would have advised that this is questionably illegal, we will find out of it goes to the courts, but it is bad government. It creates a clear sense of distrust between parliament and government, and it is deliberately designed -whatever anybody tells you - to frustrate a process of debate on whether or not we have a no-deal Brexit. All of that corrodes the trust in our institutions, and I think that’s deeply damaging.

David Frost 'downplays' move to suspend parliament — memo

David Frost, Boris Johnson's envoy to Brussels, has completed a round of meetings with EU officials today. According to a note of a meeting seen by the FT, Mr Frost told European Parliament officials the government wanted a deal as its "first option" and "downplayed" the suspension move, writes Mehreen Khan.

Mr Frost did not put forward details on how to change the backstop, but said the UK was "ready to talk and engage and, above all, get down to the detail but this would need to be accompanied by 'give and take' on both sides. The UK was open to all ideas on solving the Irish border" said the note.

He made it "clear that the currently configured backstop, as well as a Northern Ireland only version, were both unacceptable" for the UK. Mr Frost is likely to be back in Brussels next week and in weeks running up to the October European Council meeting. "It's a process" said one EU official

Number 10 insiders pleased with reaction to suspension plan

Downing Street insiders said they are pleased by the reaction of opponents to the suspension plan today. Some, such as former attorney general Dominic Grieve, have suggested that a no confidence vote in the Johnson government should be brought forward early next week, writes Sebastian Payne.

One government official said this was part of the strategy of Dominic Cummings, the prime minister’s chief adviser: “Cummings is trying to goad Grieve and co. He says the more they appear babbling on TV, the stronger the support in focus groups for the prime minister to end the nightmare on October 31.”

Number 10 insiders also argue that opponents to suspending parliament are actually wanting to stop the UK leaving the EU all together. One ally of Mr Johnson suggested the more vociferous critics of the prime minister were using "opposition to a no-deal Brexit as code to opposition to the referendum result".

Boris Johnson's plan to suspend parliament explained

Want a quick explainer on Boris Johnson's move to suspend parliament and what exactly it means? Check out this video featuring Robert Shrimsley, the FT's editorial director.

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Ruth Davidson expected to resign

Scottish Conservative leader Ruth Davidson is expected to announce her resignation tomorrow as party leader, Seb Payne writes.

Allies are citing family reasons as the "bulk" of her decision (she became a mother last October) but Boris and Brexit have been a significant factor. They insist that the decision was made long before Boris Johnson's decision to prorogue today. But the timing is notable. She will apparently continue as an MSP.

One fellow Tory MP in Scotland confirmed Ms Davidson would quit. "It's much more about her personal life than politics, but obviously recent events haven't helped."

Ruth Davidson throws up new questions for Johnson

If Ruth Davidson does quit as Scottish Conservative leader, it could have serious implications for Boris Johnson's hopes of winning a majority at the next general election.

Ms Davidson is widely credited with spearheading the Tory's revival in Scotland in the 2017 general election, while Mr Johnson is deeply unpopular north of the border.

As the FT's Mure Dickie wrote last month while Mr Johnson was still campaigning for the leadership, many in the Scottish Conservatives fear his premiership could be disastrous for the party’s revival in Scotland and even for the future of the three century-old union with England that lies at the heart of the UK.

Protesters gather in London for #StopTheCoup rally

A couple of thousand people are crammed into College Green directly opposite the House of Commons in a hurriedly arranged rally to hear speakers such as Guardian columnist Owen Jones take turns to denounce Boris Johnson, writes Darren Dodd.

The theme of the makeshift placards and chanting among the largely well-natured crowd was “Stop the Coup", echoing a social media hashtag of the same name.

And that's a wrap...

Thank you for following along with the FT's live blog on a big day for British politics. Given the uncertain state of affairs, keep an eye out for further Westminster blogs in coming days and weeks.

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