Labour Eyes New Referendum as May Heads to Egypt: Brexit Update

(Bloomberg) -- Prime Minister Theresa May heads to a European Union-Arab League leaders’ summit in Egypt on Sunday, as debate continues over a Brexit deal that can win support in a Parliament vote on Wednesday.

Key developments:

• Environment Secretary Gove hopes May will make meaningful progress in Brexit talks
• British Steel may face a financial hit if the U.K. is unable to secure a Brexit deal, two people familiar with the matter said
• Brexit backer Arron Banks’s financial holdings include insurance, financial services and diamond mining, according to the Bloomberg Billionaires Index

Gove Is Conciliatory Toward Cabinet Trio (10:55 a.m.)

Environment Secretary and leading Brexiteer Michael Gove struck a conciliatory tone towards three members of the Cabinet who are threatening to vote against the government this week, saying all voices in the party should be listened to.

A letter from Amber Rudd, the work and pensions secretary; David Gauke, the justice minister; and Greg Clark, the business secretary; was “an expression of their view” and not government policy, he told the BBC’s “Andrew Marr Show.” He also warned against his fellow Brexiteers against conducting a “heresy hunt” against those who disagreed with them.

“I think that is counterproductive and I think it is alien to the temper of our times. I think the most important thing to do is, when you have colleagues who express concerns, to listen to them in a civilized way and seek to reconcile those concerns with the vital importance of making sure that we can avert no Brexit or no deal.”

He said he hoped May would make enough progress in negotiations to hold a meaningful vote on her Brexit deal this week, and that she would make further comments later Sunday on that. He also confirmed May will make a statement to Parliament on Tuesday, with a vote to follow on Wednesday.

Labour Facing ‘Perilous’ Situation: Watson (10:30 a.m.)

Labour’s Party Deputy Leader Tom Watson reiterated comments made by his colleague Barry Gardiner, saying the party is moving closer towards backing a second referendum as soon as this week. Labour could support a plan offered by lawmakers Peter Kyle and Phil Wilson to back May’s Brexit deal so long as it is then put to a public vote, he said. "We’re heading in that direction but there is still more play in the days ahead," Watson told the BBC’s “Andrew Marr Show.”

Watson and Gardiner are taking a different line on Brexit to that of party leader Jeremy Corbyn. The Labour Party has consistently pursued an ambiguous stance on the divorce, and a possible second plebiscite.

Watson also urged Corbyn to do more to tackle antisemitism, after nine members quit this week to join a new independent group. “Be in no doubt the situation is perilous for our party and we need to act quickly,” he said.

McDonnell Says ‘Moving Towards’ Public Vote (10:30 a.m.)

Labour’s treasury spokesman John McDonnell reiterated the possibility of a second referendum. “We’ve said to break the deadlock, we’re going to have to now start thinking about moving towards a public vote,” McDonnell said said on “Pienaar’s Politics” on BBC Radio 5 Live.

“There’s increasingly large numbers of people who will consider now moving towards a public vote situation to block a no deal, and to block a bad deal, that Theresa May’s deal is – that will be the vote of this coming week,” McDonnell said.

Cabinet Trio Breached Responsibility: Duncan-Smith (10:10 a.m.)

U.K. Cabinet members who disagree with the government should think very carefully about whether they should resign from their posts, former Conservative Party leader and minister Iain Duncan-Smith told Sky News.

He spoke after Rudd, Gauke andClark wrote Saturday in the Daily Mail that they were prepared to defy the prime minister and join lawmakers pushing for an extension to article 50 if there is no significant progress next week to avoid the U.K. Crashing out of the bloc on March 29.

Duncan-Smith, a prominent Brexiteer, said he resigned from the cabinet when he disagreed with government policy. “They are doing the prime minister no good at all,” he said.

He said he hoped the three Conservative lawmakers who quit the party in the past week to join an independent group will eventually rejoin. Saying the party has always been “a broad church,” he said the door is always open for Anna Soubry, Heidi Allen and Sarah Wollaston to come back.

Labour Inching Toward Second Referendum (9:40 a.m.)

Labour is moving closer toward backing a second Brexit referendum as the risk of a chaotic no deal exit increases, according to Labour international trade spokesman Barry Gardiner. The party sees a second vote as a “safety net’’ to avoid Britain crashing out of the bloc on March 29, he told Sky News.

The party is in talks with Labour backbenchers Peter Kyle and Phil Wilson, who have put forward a plan to see Theresa May’s Brexit deal voted through on the condition that it is put to a public vote, he said.

To contact the reporter on this story: Jessica Shankleman in London at jshankleman@bloomberg.net

To contact the editors responsible for this story: Steve Geimann at sgeimann@bloomberg.net;Matthew G. Miller at mmiller144@bloomberg.net

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