Britain's parliament will not block a Brexit, even though it technically could, says Morgan Stanley in a new note.
"Constitutionally, the UK parliament is sovereign, so the outcome of the referendum is technically advisory, which implies that it would be constitutionally possible for parliament to ignore or frustrate a vote to leave. Moreover, there is a strong majority of MPs who support Remain," says Jacob Nell and Melanie Baker at Morgan Stanley.
However, none of this matters.
The main reason it will not be blocked, Morgan Stanley says, is that even though most British MPs are in favour of Remain, they are also tied to the manifesto of the last Conservative government which promised the referendum in the run-up to the last election. So the ruling party is duty-bound to honour it (emphasis ours):
"There is a convention in the UK that a manifesto commitment is binding on a government and shall be respected by parliament,and the Conservative manifesto for the 2015 election contained the commitment “to hold an In/Out referendum on UK membership of the EU and honour the result.” [Also] the Referendum Bill was passed by a large majority of the current MPs, which carries some implication that they are bound to respect the result."
On top of that, the result of the referendum was definitive enough for there to be no doubt it is what the majority of the country wants. Or as Morgan Stanley puts it: "the margin of victory was clear on a high turnout (72%), and the referendum result has not been disputed."
Here is a look at the breakdown of Conservative MPs and MPs who voted Remain:
Morgan Stanley added that with the current Conservative majority it had "ample time to complete exit negotiations before the end of the Parliament in May 2020."
If and when the UK does leave the EU, though, Morgan Stanley believes a possible re-entry will not happen:
"At that point it would become unattractive for the UK to rejoin the EU since the UK would likely not regain its special status – the rebate and the opt-outs from the euro and Schengen [a free movement agreement] – which would significantly reduce the attractiveness of EU membership."
Morgan Stanley says that although a new parliament is not necessarily bound to the decisions of the old one, it would definitely need to hold another referendum to have a clear mandate on the EU:
"A reversal of the vote to Leave would require early dissolution of this Parliament, before exit had been completed, followed by a victory by a pro-Remain party or coalition in the subsequent general election. Since no Parliament binds another, this new Parliament could reverse the decision of its predecessor and end the exit process, without holding another referendum – although it is possible that for political and democratic legitimacy, it would nevertheless feel obliged to hold another referendum."
