Brexit Bulletin: Calming the Hardliners

(Bloomberg) -- Today in Brexit: With Theresa May facing pressure to stay in the EU customs union, she reassured a group of Brexit-backing Tories that she’ll stick to her guns.

 A delegation of pro-Brexit Conservatives held private talks with the prime minister to demand she doesn’t give in to pressure and cross her red line over the customs union, Tim Ross reports.

May reassured them that she will deliver the kind of Brexit they want, according to two people familiar with the conversation. The meeting, at her office on Tuesday, seems to have satisfied the Tories, who potentially have the power to trigger a leadership challenge if they don’t like the way Brexit is going. Some Brexit supporters think May would be finished if she agreed to stay in the trading regime, as her pledge to leave is too big to go back on. 

May has no majority in the House of Commons and faces some tough parliamentary arithmetic: both the main opposition Labour Party and some pro-EU Tories support close ties to the EU. She could face a vote as soon as next month on the customs union, and enough Tory rebels have signed an amendment that could defeat her. If that happened, Brexit Secretary David Davis signaled on Wednesday, the government would “respect” Parliament. May has suffered six defeats in the House of Lords in the last eight days on her flagship Brexit legislation – a reminder that lawmakers are increasingly able to shape policy.

Brexit Bulletin: Calming the Hardliners

The European Union is also keen for the U.K. to stay in the customs union as it would help unblock negotiations that are making little progress in Brussels. The EU has rejected May’s proposals for how customs could work after Brexit, even as the U.K. continues to defend the ideas.

But May is now also facing pressure from backers of Brexit at home to ditch what is said to be her favored option for a new customs and tariff regime. That plan would involve the U.K. collecting tariffs on the EU’s behalf and then refunding companies whose goods are destined for end-users not based in countries where the bloc’s tariffs apply. Tory critics say the mechanism is far too complicated and won’t work; those voices are said to include Davis, Foreign Secretary Boris Johnson, Environment Secretary Michael Gove and Trade Secretary Liam Fox. Brexit supporters fear it will tie the U.K. too closely to the EU’s tariff regime. 

The Brexit “war cabinet” of senior ministers met on Wednesday but did not discuss customs plans in detail. We’ll have to wait for next Wednesday’s meeting, with just six months to go until the whole Brexit deal is all meant to be wrapped up.

Today’s Must-Reads

  • Brexit has put the issue of a united Ireland back on the agenda, Dara Doyle reports, even as a public vote on the issue remains unlikely
  • Davis’ comments to the Brexit committee yesterday reveal that Parliament, not May, could take charge of Brexit. Davis said “I expect the government’s policy to be upheld.” Expectations matter in politics, but they are not the same as guarantees
  • May will publish a 50-page wishlist of her demands for the post-Brexit trading relationship as soon as next month, the Sun reports. 

Brexit in Brief

Hammond’s Promise | Chancellor of the Exchequer Philip Hammond promised lawmakers that when the Brexit deal comes to Parliament for a vote the Treasury will provide “maximum possible transparency in terms of our data and modeling.” Brexit-backers who have long criticized Hammond for being too gloomy might not be too thrilled by that prospect.

Irish Fudge | Davis suggested the issue of the Irish border might not be settled when the U.K. leaves, as a solution doesn’t need to be in place until the end of the transition period. He said the so-called backstop option that’s causing so much disagreement is a “reserve parachute,” which neither side wants to have to use. The U.K. wants the future trade deal to be good enough to allow for an invisible border – that’s plan A. Trouble is, some officials in Brussels and Dublin think the fallback option will be used as they don’t think the trade deal will be comprehensive enough. Ireland again insisted it wants progress on the border issue by June.

Brexit Bulletin: Calming the Hardliners

Sixth Defeat | The House of Lords voted against May’s landmark Brexit legislation for the sixth time in eight days, this time over powers the government wants to give ministers to bypass parliament.

DUP’s Warning | Nigel Dodds, a lawmaker for the Northern Irish Democratic Unionist Party that props up May’s government, said the party will withdraw its support if Brexit talks result in an agreement that in any way separates Northern Ireland from the rest of the U.K.

Financial Foothills | The U.K. is not yet in any “substantive discussions” with the EU about what the future relationship will mean for financial services, Hammond said. “We are in the preliminary foothills of exploring what might be possible in financial services.”

Brexit Budget Hole | The European Commission will kick off a political battle next week over the bloc’s next budget, as it seeks to plug the €10 billion ($12.2 billion) annual hole torn by the U.K.’s departure.

Coming Up | EU chief negotiator Michel Barnier is in Sofia and is due to give a speech to a finance conference. Michael Gove takes questions in Parliament at 9:30 a.m. There’s also a non-binding debate on the customs union, although the government is playing down its importance.

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To contact the author of this story: Emma Ross-Thomas in London at

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