Brexit Bulletin: The Small Print’s the Killer

(Bloomberg) -- Today in Brexit: May’s Brexit looks increasingly impossible to get through Parliament.

Prime Minister Theresa May had been hoping to corral her Cabinet behind her Brexit plan as soon as today. But late on Sunday, it all went a bit quiet. As the details of what May is prepared to offer Brussels emerge, the opposition to her strategy just gets tougher.

In her efforts to avoid a hard border on the island of Ireland and a border down the Irish Sea, May risks tying the U.K. to European customs rules indefinitely. But there’s more: The European Union is also asking the U.K. to agree to a bunch of other regulations, such as environmental rules, to make sure the “level playing field” is maintained after the split. Remember, those rules will be made without U.K. input after Brexit.

Brexit Bulletin: The Small Print’s the Killer

May’s plan has been attacked by the Northern Irish party it was designed to please, and by hardline Brexit-backers who see it as a betrayal of the cause. Those two teamed up over the weekend to issue a stark warning to May that if she doesn’t change tack they will vote against her deal.

But it’s also coming under attack from pro-EU members of parliament. Jo Johnson, the pro-EU brother of Brexiteer Boris, resigned on Friday because he said the negotiations had left Britain with a choice between “vassalage” or the chaos of no-deal. Justine Greening, the former education secretary, backed Johnson. Both now want a second referendum.

Johnson’s resignation could affect the parliamentary arithmetic. He set out a compelling argument for why he and others shouldn’t vote for May’s deal. Watch for more Tories to join him.

The BBC says several Cabinet ministers had concerns about the prime minister's plans as far back as July, and two say there’s little chance Parliament will go for the deal.

Today’s Must-Reads

  • Check out our Barometer’s latest reading on Brexit’s effect on the U.K. economy.
  • “Parliament’s final judgment must be on the merits of any deal rather than its capacity or otherwise to appease the warring factions in the Conservative party,” argues the Financial Times. Johnson’s resignation could have a decisive impact on the vote, it says in an editorial.
  • Never mind job moves, look at the assets that are leaving: Major U.S. investment banks are planning to shift about 250 billion euros ($283 billion) of balance-sheet assets to Frankfurt because of Brexit, Steven Arons reports.

Brexit in Brief

Juncker’s Hope | European Commission President Jean-Claude Juncker said on Sunday he thinks a definitive Brexit deal could come within weeks. Irish Foreign Minister Simon Coveney said talks were at a “very critical and sensitive stage,” and “urgency is required.”

Mogg’s “No Deal Plus” | Jacob Rees-Mogg made what he called a proposal to break the impasse with the EU. Britain would offer to pay 20 billion pounds ($26 billion) — half the current divorce bill tally — to make its departure “as amicable as possible” and leave after a 21-month transition period. Still doesn’t fix the Irish border issue, which the EU says is required for a transition.

Stockpiling | Add BT Group and HP Inc. to the list of companies stockpiling parts in case of Brexit-related delays. BT is looking at hoarding network equipment, while HP is in discussions for warehouse space in Birmingham, Suzi Ring and Thomas Seal report. The list already includes Cadbury, Airbus and AstraZeneca.

We’re Spanish | International Consolidated Airlines Group, the owner of British Airways and Iberia, is in talks to be considered a Spanish company after Brexit, El Pais reports. IAG’s head office is in the U.K., and it’s listed in London and Madrid.

France vs Frankfurt | Citigroup is looking for a bigger office in Paris, the FT reports. Staff lobbied for a move to Paris rather than Frankfurt after Brexit, and the bank will now move fewer jobs to the German hub, the paper says. 

Coming Up | Ministers from the EU member states meet in Brussels, with Brexit on the agenda. Irish Foreign Minister Simon Coveney also has a bilateral meeting with chief EU negotiator Michel Barnier. 

On the Markets | Sterling fell 0.5 percent early on Monday to $1.2906 as May’s Brexit plan looked in danger. It had rallied 2 percent so far this month on signs of an imminent deal. Meanwhile, a gauge of volatility expectations for the FTSE 100 Index of stocks has jumped to its highest level since July.

Brexit Bulletin: The Small Print’s the Killer

Want to keep up with Brexit?

You can follow us @Brexit on Twitter and join our Facebook group, Brexit Decoded

©2018 Bloomberg L.P.