Brexit Bulletin: Remember This Week

(Bloomberg) -- Today in Brexit: Don’t forget what we learned this week over the summer holidays.

It’s been a dramatic week in U.K. politics, and, though the U.K. government is now winding down for summer, what happened this week will still be resonating later this year when Prime Minister Theresa May brings any Brexit deal she negotiates with Brussels back to Parliament  for approval.

The main takeaway? May will struggle to get her deal through Parliament, and if she does manage it, it will probably be by a whisker. That means the U.K.’s most important economic and political decision since World War II will be taken on the back of a knife-edge vote. If you thought the referendum result was tight at 52-48, consider that some votes passed this week by a margin of three.

Brexit Bulletin: Remember This Week

Here’s what else we learned this week:

  • Theresa May is more worried about appeasing hardline pro-Brexit rebels in her party than she is about pro-EU soft Brexit critics. She gave in to the hardliners on Monday to avoid defeat, and faced down the “soft” camp the next day. 
  • There might be a good reason for that: Steve Baker, the former minister who is coordinating the hardliners, told Parliament that 80 lawmakers do not like May’s plans.  
  • There isn’t a majority in Parliament for the U.K. to stay in the EU customs union, the trading setup that businesses want to keep to facilitate trade. Or there wasn’t this week. But there could have been if a few Labour lawmakers had voted the other way.
  • Labour is not going to support May’s Brexit deal. 
  • A convention that allows ill or indisposed lawmakers to stay home without it affecting the result of votes is in danger – at least for important votes in future – after it was breached this week in a scandal involving the Conservative chief whip and a Liberal Democrat on maternity leave.
  • May has admitted that her new customs setup – which she describes as a “novel idea” – won’t be completely ready for December 2020, when the Brexit transition period is meant to end.
  • She is also being a bit coy about what happens to the Irish border in the event of no deal. Logic would dictate that some kind of border needs to go up if the U.K. crashes out of the bloc – it would have to in order to protect the single market’s new frontier. But neither Ireland nor the U.K. want that. 
  • Talk of extending the negotiating deadline beyond March 2019 is getting a bit more common, at least on the EU side.

Today’s Must-Reads

  • The Economist argues that a second referendum is the “least bad” option to unblocking the deadlock in Parliament over Brexit.
  • May will reaffirm her pledge to keep the border between Ireland and Northern Ireland open following Brexit, saying the notion of a hard border is “almost inconceivable.”
  • Downing Street’s “secret Brexit back-up plan” could yet rescue the Conservatives, Fraser Nelson writes in the Telegraph.

Brexit in Brief

Final Offer | Brexit-backing cabinet minister Andrea Leadsom warned EU Brexit negotiators to accept May’s divorce proposal or force the U.K. into  crashing out of the bloc without a deal. The EU must accept that the plan agreed to by most of May’s Cabinet this month is the “final offer.”

New “Vim” |  Brexit Secretary Dominic Raab promised to bring new “vim” to the talks, at his first meeting with chief EU negotiator Michel Barnier. They had a dinner of crab salad with fennel, fillet of sole, grilled asparagus and steamed potatoes, which was a change from David Davis’s famous offering of beef Wellington.

No Deal Planning | The U.K. is going to start issuing warnings to companies and citizens over the summer about preparing for a no-deal exit. Meanwhile the European Commission has also renewed calls on governments and businesses to step up planning in areas from aviation, food safety, financial services, and the flow of personal data. The 27 aren’t all taking it seriously, according to a Bloomberg survey.

Delaying the Deadline? | An EU official briefing reporters in Brussels raised the prospect of an extension to the Brexit day deadline to allow more time for negotiations. Still, he said the idea hasn’t been discussed between governments yet, Ian Wishart reports. 

Moving to Madrid | Insurance company Admiral is setting up a business in Spain because of Brexit. It’s set to start operating there from January next year. 

On the Markets | British stocks have outperformed the euro area over the past year, rallying on the assumption of a soft Brexit. The risk is that they are under-pricing the chances of a  messy exit or one that severs the most important economic ties, Justina Lee reports.

Brexit Bulletin: Remember This Week

Coming Up | EU27 ministers (who have so far said little on May’s plans) meet to discuss Brexit, followed by a press conference by Barnier at around 1 p.m. Brussels time. May gives a speech in Belfast at around 10:30 a.m.

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