Brexit Bulletin: Eye Rolls

(Bloomberg) -- Today in Brexit: Theresa May has lived to fight another day, avoiding defeat in Parliament over her flagship Brexit bill, which transfers thousands of European Union laws into U.K. law. But the fallout from the vote could have lasting consequences.

There was a moment that went almost unnoticed during the U.K. Parliament’s debate on Theresa May’s flagship Brexit bill.

The prime minister sat in the House of Commons on Wednesday, rolling her eyes when former Chancellor of the Exchequer Ken Clarke accused her of reneging on the agreement that would have given Parliament more say over Brexit negotiations. As Robert Hutton and Tim Ross report, May has probably squandered trust with the pro-European Tory faction. This behavior could come back to haunt her.

But she wasn’t the only one rolling her eyes. One Brussels diplomat, when asked by Bloomberg for thoughts on events unfolding in Westminster, merely texted back an “eye roll” emoji. (Not so helpful when compiling a news report.) It summed up the European side’s feeling about the Brexit talks: a mixture of despair, disregard and, for some, a little dread.

For a few weeks now, EU officials have been worrying about the prospect of failing to reach a comprehensive deal before the U.K. formally exits. Michel Barnier, the bloc’s chief negotiator, has said the 27 remaining governments need to step up contingency planning. The leaders’ statement after a major summit in Brussels next week will likely talk about the need for “preparedness.”

Diplomats in Brussels don’t think Wednesday’s vote affects the chances of “no deal” – they gave up trying to predict the consequences of upheaval in London months ago – but they do fear that the continuing divisions in May’s Cabinet could lead to a collapse of talks “almost by accident,” according to one official familiar with the negotiations.

Back in London, the question is what happens next. The staunchest Brexit faction was pleased by Wednesday’s outcome. “The government stood firm today,” lawmaker Jacob Rees-Mogg told the European Research Group of like-minded lawmakers on its WhatsApp forum. It wouldn’t be a surprise to see May now under pressure to go further to please the Brexiters and reverse some compromises she’s made to pro-remain colleagues.

Today’s Must-Reads

  • They call him “The Chief,” but few outside the Conservative Party know who Julian Smith is. Bloomberg’s Kitty Donaldson has a portrait of the man Theresa May depends on for parliamentary votes.
  • What do they think in Sunderland? “People say Brexit is hardly a topic of conversation any more.” Bloomberg reports from the city synonymous with Britain’s vote to leave the EU, where the the misery that prompted support for Brexit persists.
  • The Times’s Iain Martin says the European Commission is “observing the farce” in Westminster, hardening its stance and driving us toward a Brexit crisis this winter.

Brexit in Brief

Coming Soon | The U.K. government’s White Paper on its proposed future relationship with the EU will be published within “the next few weeks,” May said.

Euro-Zone Alert | The European Central Bank continues to operate under the assumption that the U.K. and EU may fail to reach a Brexit deal, according to Joachim Wuermeling, a member of the ECB’s supervisory board. “That seems more than appropriate given recent developments in the U.K.,” said Wuermeling, who is also a Bundesbank executive board member.

Hitting Construction | London homebuilders, which until now have been cushioned from price falls by the government’s Help to Buy program, are starting to feel the pinch. Berkeley Group Holdings signaled that profits may take a 30 percent hit in the 2018-2019 fiscal year, sending its shares down the most in almost two years. “Macro and political uncertainty, including Brexit” are leading to caution, Berkeley Chairman Tony Pidgley said.

Fortress Europe | The European Commission is making plans that could mean British citizens need a visa to enter the EU after Brexit, according to a document presented to the European Parliament, Politico reports. The proposal is among a list of amendments to laws and regulations aimed at avoiding disruption.

Hard Times | The view from Denmark: Brexit is “going to be a very hard process from here on,” Danish Finance Minister Kristian Jensen said in an interview.

Before Brexit | The EU is on course to hand dozens of U.K.-based companies a pre-Brexit tax bombshell, according to people familiar with a state-aid probe. It could lead to bills exceeding 1 billion pounds ($1.3 billion.)

Important Visitor | Ireland is rolling out the red carpet today for European Commission President Jean-Claude Juncker. He will address a joint session of the Irish Parliament, a rare honor that May turned down last year. He also will attend a dinner hosted by Irish Prime Minister Leo Varadkar at Dublin Castle, once the seat of British power in Ireland. On Friday, he’ll tour Dublin’s Croke Park stadium, where British troops killed 14 civilians in 1920. Expect lots of expression of solidarity with Ireland, and a smattering of Seamus Heaney quotations.

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