No Deal as a threat

Jonathan Portes rightly remarked in response to my last post that he had had similar thoughts on the ECJ ruling now improving the UK government's bargaining position. This is as Theresa May could now threaten to rescind Article 50 in the event she does not gain concessions, and restart the process. Thinking about this a little more, I am no longer sure this is correct.

Firstly, as a number of commentators have pointed out, the withdrawal of Article 50 may not allow for gaming in this way.

Secondly, it it is not clear why the rest of the EU would see this as a threat at all. Wouldn't most EU member states be quite happy for the UK to withdraw Article 50, particularly in this embarrassing way?

Thirdly, and most crucially, it undermines the greatest threat in her arsenal, the so called "No Deal" threat. This is an option so insanely damaging (and so much more so to the UK than the rEU) that no sane government would opt for it. The threat is not so much achieved by saying "we are mad enough to do this" (even the current British government probably couldn't make this believable) but by Theresa May saying or implying that if she does not get what she wants she has insufficient power to prevent such an outcome, precisely because her parliamentary support is extremely shaky. The only plausible mechanism by which it could happen is by default: through parliamentary gridlock where Commons neither passes he deal nor agrees on anything else. That possibility has now become significantly less likely, as in the event that the March deadline approaches, Parliament now has a mechanism to avert no deal without agreeing to any specific deal (though not without any political consequences). MPs could even claim doing so allowed for a 'better Brexit' at some later, likely unspecified point in time. This means that May's bargaining position by threat, whether it ever had any leverage or not in reality, is now significantly less real. We still have political gridlock, but it no longer provides a mechanism necessarily sufficient for No Deal.

In other words, we now have a Doomsday gap: