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  November 3rd, 2016 | Written by

BREAKING NEWS: Government’s Brexit Plans Foiled by Court

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  • UK court: Government must consult with Parliament before exiting EU.
  • Most UK parliamentarians were in favor of staying in the EU at the time of the Brexit referendum.
  • The British pound rallied on the news of the court's Brexit ruling.

A London-based United Kingdom High Court ruled today that the government must consult with Parliament before moving to exit the European Union.

Prime Minister Theresa May and her government had planned to invoke Article 50 of the Lisbon Treaty—the mechanism by which member states give notice of their intention to leave the EU—in March. That would start a two-year clock ticking for the UK and EU to negotiate the terms of their future relationship before the exit becomes final. The court’s ruling throws a monkey wrench into the government’s plans.

In a referendum on June 23, UK voters, by a measure of 52 percent to 48 percent, approved a measure to exit the European Union.

The basis of the lower court’s ruling was that the government’s unilateral action to execute a Brexit violated the 1972 European Communities Act. Only an act of Parliament, the court decided, could undo the strictures of that legislation. The government announced it would immediately appeal the lower court’s ruling to the Supreme Court of the United Kingdom.

The immediate impact of the court ruling is that the government would have to expose its negotiating strategy with the EU to parliamentary scrutiny, something it has so far steadfastly resisted. And, the ultimate say on Brexit would be left to Parliament in an up-or-down vote.

Most parliamentarians—from all points on the political spectrum—were in favor of staying in the EU at the time of the referendum. Conservative members were split on the issue while hefty majorities of Labour and Liberal Democratic deputies opposed Brexit.

Some observers say that Parliament—which approved the Brexit referendum in the first place—would be hard pressed to frustrate the popular will, no matter their personal beliefs. But others note that the referendum was not legally binding and that many UK voters appear to have expressed buyer’s remorse over the vote’s outcome. In any event, the government’s appeal to the Supreme Court will likely take proceedings well into next year, delaying the government’s original Brexit timetable.

And what do the markets think of all this? The British pound, which has been battered since the outcome of the June vote became known, rallied on the news of the court’s ruling.