Brexit Bulletin: Brussels Being Helpful?

(Bloomberg) -- Today in Brexit: The EU had called Theresa May’s customs proposal unworkable. But in a boost for the embattled prime minister, negotiators now are engaging with it. 

Prime Minister Theresa May can’t get her inner cabinet to back her proposal for post-Brexit trade, but at least the European Union is starting to engage with it.

Negotiators have given the U.K. a list of questions about how the complicated and innovative customs plan might work, Ian Wishart reports. The proposed system would mirror the EU’s customs regime, with the U.K. collecting tariffs on the bloc’s behalf and reimbursing businesses if U.K. levies are lower. While negotiators are still struggling to see how it would work, they want to find a way forward. The next round of talks is May 22.

Brexit Bulletin: Brussels Being Helpful?

It’s still true that most EU officials think the best solution would be for the U.K. to just stay in the existing customs union. That’s a red line for May, at least for now, even though Parliament is pushing her in that direction. Brexit backers have issued veiled threats to oust her if she caves.

Brexit supporters also hate May’s customs-partnership plan: Boris Johnson, her own foreign secretary, called it “crazy.” The hard-liners don’t like the fact that it would keep close links to the bloc, saying that could be a back-door route to remaining shackled to the EU. Nor is it likely to be ready by the end of the transition period, December 2020, thus opening up the possibility of a longer phase-in. There, Brexiters spy a trap.

May’s position is perilous at home, with her Cabinet, not just Johnson, exhibiting signs of open defiance. Remember that EU officials have often said in private they would prefer to deal with May than see her ousted and replaced by Johnson or arch-euroskeptic Jacob Rees-Mogg.

Today’s Must-Reads

Brexit in Brief

Galileo Threat | The U.K. linked continued participation in the Galileo satellite program with post-Brexit defense cooperation, in what looks like a return to May’s previous policy of using threats over defense to get her way, Alex Morales reports. May had abandoned such rhetoric, promising “unconditional” commitment to Europe’s security, but a government document published on Wednesday issued a not-very-subtle warning: “The arrangements for any U.K. cooperation on Galileo are an important test case of the depth of operational cooperation and information sharing envisaged under the Security Partnership.”

Pensions at Risk | British pensioners in the EU could lose access to private pensions unless U.K. and European negotiators reach a deal that allows the payments to continue after Brexit, Julie Edde reports. There are 38 million people living on the continent who have policies with U.K. insurers, and without a deal, insurers and pension providers would be legally barred from sending out payments. 

Food Prices | Even the best possible trade deal with the EU after Brexit may not be able to save Britons from paying more for their food, as new customs checks will push up prices according to a report from a House of Lords committee. In a no-deal scenario, food tariffs could average 22 percent, it said.

Brexit Bulletin: Brussels Being Helpful?

House Price Gloom | A gauge of U.K. house prices dipped to its lowest since in more than five years last month, according to the Royal Institution of Chartered Surveyors, with the slowdown most acute in London and the southeast. A net balance of 65 percent of London agents reported falling prices last month, the weakest reading since the depths of the financial crisis in early 2009.

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To contact the author of this story: Emma Ross-Thomas in London at erossthomas@bloomberg.net.

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