Brexit Bulletin: A Deal, and Then the Drama

(Bloomberg) -- Today in Brexit: The EU is making increasingly positive noises that a Brexit deal is within reach. But don’t breathe easy just yet — there are still battles to come when Prime Minister Theresa May brings her deal back to Parliament.

Michel Barnier, the European Union’s chief negotiator, reckons a Brexit deal is in sight. His tone has shifted, he’s increasingly polite about Prime Minister Theresa May’s Brexit plans, and on Monday he set out a timeline to a deal: six to eight weeks.

The pound surged on the prospect that a path to an agreement is emerging after months of dire warnings that the U.K. could tumble out of the bloc into legal limbo.

Barnier’s timeframe for a divorce deal – covering the financial settlement, citizens’ rights and the Irish border – takes us to to early November, when a one-off summit is expected. The Guardian reports that Nov. 13 is being penciled in for the final agreement.

If a deal is in reach it’s because a lot of the trickiest decisions will be postponed until after Brexit day, as Bloomberg reported last week. The two sides are focused on getting the divorce agreement over the line and securing a two-year transition period that will give businesses breathing space. Negotiators haven’t yet started drafting the political declaration on what the future trade and security ties will look like. That will have to be done hastily before November. It will lack detail, but that is seen as a virtue as it could make it easier for the U.K.’s bitterly divided lawmakers to accept.

But May is not out of danger. An agreement still needs to be reached on the issue of the Irish border – a problem that’s probably impossible to solve without alienating at least one group of lawmakers whose support she needs. Whatever deal she gets has to be approved by Parliament.

It’s not just her allies in the Northern Irish Democratic Unionist Party who are watching closely. Hardline Brexit-backers in her own party are also on high alert in case May’s deal on the Irish border ends up shackling the U.K. to the EU forever, Robert Hutton reports. They worry that the so-called backstop, which is meant to guarantee that no hard border emerges on the island of Ireland after Brexit, will become plan A, tying the U.K. to EU rules and trade policy indefinitely. (Worth remembering that former Brexit Secretary David Davis nearly resigned over the Irish backstop, with similar concerns.)

The hardliners in the European Research Group are also planning to fight May over another apparently arcane matter: how long European law will apply in Britain after exit day, Rob reports. For all the noise about “chucking Chequers,” the Brexiteers are also paying attention to more subtle ways their longed-for Brexit could be watered down.

The question for hardliners is this: Will they really vote against May’s Brexit deal and risk triggering a general election that Labour could win? Labour’s Brexit would be even softer than May’s, and that’s before you take into account the party’s flirtation with the idea of a second referendum.

Today’s Must-Reads

  • U.K. labour unions voted overwhelmingly to keep open the option of a second referendum and to fight a Brexit deal that doesn’t defend workers. The move adds pressure on Labour leader Jeremy Corbyn to define his position.
  • Hardline Conservative euroskeptics led by Jacob Rees-Mogg have decided against publishing their alternative plan for Brexit, the FT reports. The Sun reports that part of their plan involved “flying squads” of inspectors in Northern Ireland.
  • While polls show Brits think Brexit was the wrong decision, they still want to leave, writes pollster Matt Singh. And a soft Brexit compromise isn't very popular either.

Brexit in Brief

Of Bonds and Brexit | Corporate borrowers are protecting themselves against being caught off-guard by a messy Brexit, Katie Linsell reports. Warnings about how Brexit might prevent investors from getting their money back are getting longer in bond documentation. Clauses that allow issuers to switch jurisdiction away from English law are also appearing.

Stuff of Tyrants | Nearly two years after the Daily Mail branded Britain’s High Court judges “enemies of the people,” Lord Chief Justice Ian Burnett has hit back at the newspaper for its front-page splash. It was the sort of phrase used “by tyrants throughout history to justify the persecution and death of those who do not toe the line,” he told an audience in Brisbane, Australia.

Boris’s Plan | Boris Johnson will continue to “throw rocks” at Theresa May’s Brexit plan in the run-up to the Conservative Party conference at the end of the month, but doesn’t plan to launch a leadership bid immediately, the Guardian reports. His focus for now is on getting May to switch her Brexit strategy, the paper reports.

On the Markets | The pound surged after Barnier’s comments on the timetable – tipping back over the $1.30 mark. European equities rose the most in two weeks as a timeline to Brexit starts to emerge.

Coming Up | Barclays, Citigroup and JPMorgan executives give evidence on Brexit to Commons Treasury Committee at 9:15 a.m. May chairs Cabinet meeting at 9:30 a.m. Rees-Mogg addresses launch of Economists for Free Trade report on benefits of Brexit at 11 a.m. Chancellor Philip Hammond takes questions in Commons at 11:30 a.m and then testifies to House of Lords Economic Affairs Committee at 3:30 p.m. Shadow Chancellor John McDonnell addresses TUC Congress at 4 p.m.

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