Brexit Bulletin: Mind the Gap

Brexit is 15 days away.

(Bloomberg) --

Today in Brexit: Dawn breaks in Brussels with talks on a Brexit deal still alive but cracks emerging back in the U.K.

What’s happening? British and European negotiators worked past a self-imposed midnight deadline in an effort to thrash out a Brexit deal. They’ll resume again today, an EU official said, just one day before a crucial leaders’ summit in Brussels. An accord is clearly in sight but the devil remains very much in the details.

Brexit teams locked themselves away in Brussels throughout Tuesday as they battled to agree on a draft legal text of a deal in time for the summit. The longer things went on the clearer it became that a deal was within reach. At one point, a weary Bloomberg reporter was able to identify where the fate of Brexit was being decided.

Back in London, Prime Minister Boris Johnson briefed key factions on the emerging plan, mindful of how Northern Ireland’s Democratic Unionist Party and Tory euroskeptics scuppered a deal struck by his predecessor, Theresa May. After 90 minutes with Johnson, DUP leader Arlene Foster was hardly effusive: “It would be fair to indicate gaps remain and further work is required,” she said in a terse statement.

Arch-Leaver Steve Baker said his European Research Group could see a “tolerable” deal emerging. But then The Sun reported that veteran euroskeptics reacted badly when briefed on Johnson’s plan. Britain is said to have made several big concessions in recent days to secure a deal, Bloomberg’s Ian Wishart says, including accepting there will be customs checks between Northern Ireland and the rest of the U.K. That is likely to be the hardest sell to his Northern Irish allies and Tory euroskeptics.

There may be optimism that a deal is within reach, but no one in Brussels underestimates the difficulty of getting any eventual pact through Parliament in London. Nothing is agreed until everything is agreed. 

Today’s Must-Reads

• The pound is surging, and the U.K.’s FTSE-250 index just had its best week since 2016. Alas, John Authers writes for Bloomberg Opinion, we have a clear precedent for the market to get Brexit wrong.
• “We are fed up.” Bloomberg’s William Horobin reports from Calais on how Europe’s seaports are preparing for Brexit. (Remember, Dover told Bloomberg last month it’s “ 100% ready.”)
• Boris Johnson’s chosen path will fail to secure Britain’s long-term interest, argues Rafael Behr in the Guardian.

Brexit in Brief

Trading Brexit | With a finish line potentially in sight, investors have started preparing for the Brexit endgame. Bloomberg’s Samuel Potter, Ven Ram and Cecile Gutscher run through what that could look like in key markets. With the pound at $1.2760 early on Wednesday, traders are gearing up for a nail-biting finish.

Next Steps | Continued uncertainty would probably depress U.K. economic growth and require further monetary stimulus from the Bank of England, according to policy maker Gertjan Vlieghe, though he says a near-term Brexit deal would “probably” avoid that. Separately, BOE Governor Mark Carney told Parliament Tuesday that Britain’s biggest banks are trimming their exposure to currency markets as Brexit nears. 

Tech Bargains | Overseas bidders have announced about $60 billion in deals for British tech companies since the vote to leave the European Union three years ago, according to data compiled by Bloomberg.

Second Referendum | Scottish First Minister Nicola Sturgeon repeated her call for a new independence referendum north of the (Scottish) border and said her nationalist government will soon demand the right to hold one.

Labour MPs are concerned about the prospect of going to the polls for an election if Brexit remains unresolved, the Guardian reports.

Start the Engines | U.K. carmakers made an eleventh-hour call on the government to strike a deal with the European Union to safeguard the future of the industry.

Delaying Tactics | Has the Conservative Party’s election literature given the Brexit game away? The BBC’s Joey D’Urso reports that Tory leaflets intended for use in an upcoming election suggest that the U.K. will not have left the EU by Oct. 31.

Brexit-Free News? | Are you fed up with Brexit? No, neither are we, of course. Anyway, just in case you know anyone who is tiring of this drama, Sky News is launching a pop-up channel, “Sky News Brexit-Free”, at 5 p.m. tonight. It will run for five hours every weekday, Sky said. 

Want to keep up with Brexit?

You can follow us @Brexit on Twitter, and listen to Bloomberg Westminster every weekday.

To contact the editor responsible for this story: Caitlin Morrison at cmorrison59@bloomberg.net, Leila Taha

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