What the U.K. court decision means for Brexit

WSJ — U.K. Prime Minister Theresa May’s Brexit plans were dealt a blow Thursday when the High Court ruled that the process to extricate Britain from the European Union required parliamentary approval. Though the decision isn’t the final word on the issue, it sent the pound sharply higher, with investors interpreting it as a nudge toward a “softer” exit. Here’s a quick look at what the decision means for the U.K.’s path to Brexit:

The court ruling doesn’t mean Brexit won’t happen

The ruling concerns the legal process by which Britain plans to exit the European Union—not the decision to leave itself. Also, both major parties say they respect the outcome of the June referendum. The decision could, however, delay Prime Minister Theresa May’s self-imposed tight schedule for negotiating Britain’s exit. Mrs. May has said she wants to trigger Article 50,which formally launches a two-year exit negotiation period, by the end of March next year.

The path is complicated

The government said it would take the ruling to the Supreme Court, which has set aside Dec. 5-8 to hear the case. And if a bill triggering Article 50 were passed further down the line, it would have to go through the House of Lords, whose members are overwhelmingly in favor of the U.K. remaining an EU member. Crispin Blunt, a Conservative lawmaker, told The Wall Street Journal that resistance from the upper chamber could delay Britain’s exit by up to year.

Sterling soared on the news

The pound, which in recent weeks has sunk to a more than three-decade low on fears that Mrs. May will pursue an economically damaging “hard” Brexit, strengthened on the news of the court’s verdict. Economists say a “soft” Brexit would improve the outlook for the economy in the long term.

The ruling could shape the U.K.’s future relations with the EU

If upheld, the ruling will give the parliament a say in what the U.K.’s future relations with the EU will look like, making the prospect of a “hard” Brexit less likely. Some political experts have suggested that if the plaintiffs win, lawmakers—most of whom supported the U.K.’s continued EU membership—will have an opportunity to steer the country toward a “softer” exit, with more ties to the bloc and a more open immigration policy.

A snap election can’t be ruled out

Mrs. May’s critics argue that the ruling Conservatives, who secured a narrow parliamentary majority in 2015, need to renew their mandate to govern the country following the resignation of David Cameron after the referendum. They also say Mrs. May herself needs to obtain a direct approval for her policies on exiting the EU in a general election. The prime minister has said a general election would only increase uncertainty in what are already uncertain times. However, as the legal challenge to Brexit unfolds, she might want to obtain a renewed democratic mandate.