Brexit Bulletin: May Staggers On

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Today in Brexit: Theresa May lives to fight another day, though nothing has been really resolved.

Prime Minister Theresa May has survived another crisis. If staggering on until Brexit day is her goal, then that is a victory of sorts.

But little progress has been made in the past couple of months. And the real negotiation – the one with Brussels rather than the one inside the U.K. government – still faces some major hurdles.

May averted a disaster: She avoided losing a Cabinet minister whose departure could have unleashed the pent-up rage of Brexiters, set off a series of cabinet resignations and led to even a leadership challenge. And she kept him, her euroskeptic Brexit Secretary David Davis, without giving up much in the way of concessions. But the fight has just been postponed and will be replayed again in a matter of weeks or months.

The row this time was over the so-called Irish backstop: a long-disputed clause in the divorce accord that aims to keep the Irish border free of police and control posts no matter what future trading relationship the EU and U.K. finally decide on. It’s a potential deal breaker and the EU wants progress in time for a summit at the end of this month.

The proposal that May ended up sending to Brussels – after a fraught morning wrangling with her chief negotiator – only tackles half of the problem. It’s all about customs, and proposes keeping the U.K. in the EU’s customs regime after Brexit as a last resort to avoid a hard Irish border. But it doesn’t address how to keep rules the same across the island, divided between the EU-member Republic and U.K. province Northern Ireland, which is essential if border checks are to be avoided.

Remember that nice slideshow the EU put out showing how customs checks were just a small part of the problem? Now there’s another fight brewing that will probably present May with the choice of alienating the Northern Irish allies who keep her in power or enraging the Brexiters.

EU diplomats weren’t very polite about the proposal when it landed on Thursday. 

“It’s a fudge that satisfies her cabinet, but it’s a fudge that’s practically irrelevant to reality,” one told Bloomberg’s Ian Wishart.

Still, the near-crisis this week might have produced some good news for May. The pro-EU Tory rebels who defeated her in December and have been threatening to do so again next week appear to be in no mood to fatally wound the prime minister just as her position looks so precarious. One lawmaker said on Thursday they don’t want to destabilize her ahead of the June summit. So the votes on her Brexit legislation next Tuesday and Wednesday might not offer the high drama that had been expected if rebels hold their fire until a vote slated for July. Another crisis averted, and May staggers on.
 

Today’s Must-Reads

• In a leaked recording of a private comments, Foreign Secretary Boris Johnson said there could be a “meltdown” in Brexit talks but not to “panic.” The Brexit fight at the heart of government is “very, very difficult” and there’s a risk Britain could remain trapped in EU structures after the split. Buzzfeed got the tape.
• Foreign Office Minister Alan Duncan said in Berlin that a second referendum on the Brexit deal would “I suppose, just be possible.” On any other day that would have been big news.

Brexit in Brief

Money Better Spent | Brexit uncertainty is forcing British drugmakers to spend hundreds of millions of pounds to ensure the supply of medicines to patients, siphoning off money that could have gone to developing new treatments, the head of the country’s industry lobbying group said. “People will look back and say this money has been wasted,” Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry, said in an interview. “Every pound and euro, we want to invest into science and research.”

Robots Instead of Migrants | U.K. businesses are turning to technology such as artificial intelligence and robotics to deal with a shortage of skilled workers, according to a report by the Confederation of British Industry.

Brexit and Independence | Brexit has entrenched divisions among voters in Scotland, though more are warming to the economic argument for pursuing independence from the U.K., according to new research. A study showed that support for independence had aligned with Brexit, with people who want to stay in the EU now more likely to back leaving the U.K. Euroskeptics, meanwhile, are more likely to back Britain’s governing Conservative Party in Scotland at the expense of the Scottish National Party, which holds power in Edinburgh.

On the Markets | Some commentators have dismissed Brexit negotiations as a soap opera, but options traders are taking no chances ahead of the votes in parliament next week. The premium that traders demand to insure against volatility in sterling rose to its highest in almost four months on Thursday, ahead of the June 12 vote on the withdrawal bill.

Parliament Vote | The government has proposed its own amendments to the withdrawal bill, rejecting most of the clauses added by the House of Lords and attempting a compromise to head off a rebellion. Most contentiously, it has rejected the Lords’ amendment that would give parliament the power to tell the government what to do if lawmakers reject May’s divorce deal. Instead, it proposes that the government should make a statement on how to proceed within 28 days.

Coming Up | EU chief negotiator Michel Barnier will give a presss conference at 1 p.m. London time on Friday. May attends the G7 summit in Canada.

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To contact the editor responsible for this story: Anne Swardson at aswardson@bloomberg.net, Jones Hayden

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