Brexit Bulletin: Shred of Hope

324 Days to Go

(Bloomberg) -- Today in Brexit: The Irish prime minister has offered some qualified praise for Theresa May’s customs plan. It’s the nicest anyone on the other side has been about it.

Irish Prime Minister Leo Varadkar said on Tuesday that Theresa May’s proposal for a customs partnership was a “welcome suggestion,” and could be made to work.

This is the plan that has been rejected by more than half of May’s inner cabinet, declared dead by Brexit-backers in her party, but which the prime minister is still trying to keep alive because her team sees it as the only viable way of securing the divorce and not being toppled in the process.

So far the European Union has pushed back against it – it’s complicated, untested and would involve the EU essentially outsourcing some of its border control to post-Brexit Britain. But Varadkar said that while it’s not workable as it stands, there could be something there.

“The view of the EU is that it isn’t workable in its current form but it is something that perhaps we could make workable,” he told lawmakers in Dublin.

That chimes with what Tim Ross reported last week – that European negotiators want to explore May’s idea further and have asked the British side to answer five questions on it.

For May, the idea has to work. The other proposal the government has discussed, a looser setup known as Max Fac which is backed by the Brexiters, wouldn’t go far enough to prevent a hard border emerging on the island of Ireland. That leaves two options, both of which risk bringing down May’s government: staying in the current customs union or pursuing the dreaded no-deal scenario.

For a reminder of what May is facing, take a look at Rob Hutton’s rundown of her unpalatable options.

Today’s Must-Reads

  • May suffered multiple defeats in the House of Lords over her Brexit legislation, with peers scrapping the fixed exit date and demanding she keep the U.K. in the single market.  
  • Irish whiskey might be about to get caught in the Brexit wars, Dara Doyle reports. Bushmills from Northern Ireland could lose its EU “Irish whiskey” label after the divorce.

Brexit in Brief

From EU to Corbyn | Sabine Weyand, the EU’s deputy chief negotiator, weighed in on the debate about Brexit, public ownership of companies and whether Jeremy Corbyn’s Labour would be able to carry out its nationalization plans without leaving the bloc. She calls it a “myth” that public ownership is banned. For more on Weyand, read Ian Wishart’s profile of her and her counterpart Olly Robbins.

Sabine Weyand @WeyandSabine
Well substantiated mythbuster: EU rules do not stand in the way of public ownership of enterprises, nor do they ham… https://t.co/QBfzQ9CBvH

Retail Gloom | U.K. retailers remained in the doldrums in April, with sales dropping and demand for staff easing, according to reports released on Wednesday.

Rules for Algos | Financial firms are pressing the U.K. to stick as closely as possible to the EU’s MiFID II restrictions on algorithmic trading, Silla Brush reports. They are warning the Bank of England against imposing even tougher rules on the industry ahead of Brexit.

Coming Up | Trade Secretary Liam Fox gives a speech focused on a trade finance initiative, and it’s Prime Minister’s Questions at noon.

On the Markets | The pound fell for a second day, touching $1.3525 early on Wednesday. Even though the likelihood of an interest-rate rise this week has collapsed, the currency’s outlook now hinges on what BOE Governor Mark Carney says on Thursday, Anooja Debnath reports.

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