May Heads to Brussels for Talks on Future Ties: Brexit Update

(Bloomberg) -- A Brexiteer push to unseat Theresa May is not going to plan but the prime minister still faces a herculean task to get her deal with the European Union through Parliament next month.

May Heads to Brussels for Talks on Future Ties: Brexit Update

Key Developments

  • May returns to Brussels Wednesday for talks on future framework, especially the thorny remaining issue of Gibraltar
  • Government accepts opposition changes to finance bill to avoid defeat
  • Euroskeptic bid to oust May in confidence vote appears to have stalled
  • Northern Irish allies withdraw support for Tories in votes on budget bill
  • BOE to send analysis of EU Withdrawal Agreement next week

Length of Transition (8:50 p.m.)

EU27 ambassadors in Brussels were told on Tuesday they’re still waiting to hear back from the U.K. about the maximum length of the transition period (the EU has proposed 2022). Plus, European negotiators are still dealing with U.K. demands to put a reference to "frictionless" trade in the text -- something that France, Germany and other countries have said is impossible outside the EU single market. 
Time is running out to get everything sorted out by the summit on Sunday, leaving some diplomats to ponder what happens if it’s all not ready. They say postponement of the gathering is more likely than leaving it to the leaders to finish the job.
As for the “evolution clauses” in the Political Declaration that we mentioned earlier these will be two, a diplomat told us

  • One will be saying that in addition to the areas identified in the draft text, the parties can identify and add more areas for their partnership during the negotiations for a trade deal
  • The second will be saying that if in the future the U.K. wants a closer relationship than what’s agreed in the current declaration, the EU will welcome it

The loose ends left to tie up in Brussels (8:10 p.m.)

The European Commission told envoys that even as talks progress on the political declaration about the future ties between the U.K. and the EU, open issues related to the trade in goods, fishing and Gibraltar remain, according to a person familiar with the behind closed doors meeting in Brussels.
Theresa May will tackle the Gibraltar issue herself when she visits the Belgian capital on Wednesday, the person said, while EU and U.K. negotiators hope to reach a deal on the other two open fronts before her meeting with European Commission president Jean-Claude Juncker.

May Heads to Brussels for Talks on Future Ties: Brexit Update

National governments -- 27 of them minus the U.K. -- now hope to get the draft of the political declaration by Thursday morning, instead of Tuesday the person said, adding that the length of the text now runs to 22 pages and includes evolution clauses for the further development of the ties between the two sides in the future.

Treasury concedes over Finance Bill... again (20:00)

After a series of protest votes by DUP lawmakers, who prop up May’s minority government, the Treasury this evening accepted some Labour amendments to its Finance Bill.

May needs the DUP to get the 320 votes she needs to get her Brexit plan through Parliament and they have been abstaining and voting against her flagship finance bill.

To avoid rebellions, the Treasury has already climbed down over its plan to delay the introduction of a cap on gambling machines, and agreed to publish analysis comparing the economic impact of its Brexit deal with remaining in the European Union.

May Heads to Brussels for Talks on Future Ties: Brexit Update

“It’s absolutely staggering that the Government has accepted all Labour amendments to the Finance Bill because it couldn’t rely upon the DUP’s support. The Tories are in office but not in power. We’re watching a government falling apart in front of us,” said John McDonnell MP, Labour’s Shadow Chancellor.

Expect some noodling with wording on Gibraltar (4:50 p.m.)

Yes, Spain has publicly threatened to use its veto, but privately they see a solution in some tweaks to the text. Spanish officials want to ensure that future EU talks with the U.K. do not apply to Gibraltar. Solutions could include redrafting the offending article or using footnotes or statements for interpretation, said a person familiar with the situation who asked not to be identified because the discussions are private. In the grand scheme of things this is an inconvenience rather than a major headache for May.

Political Declaration Sign-Off Delayed to Friday (4.30 p.m.)

A meeting of senior EU27 officials to sign off the political declaration on future ties with the U.K., which was scheduled for Thursday, has been postponed to Friday, an EU diplomat tells us. It’s unclear whether this is yet another sign of delays in the negotiations.

EU government envoys in Brussels will convene to take stock of the situation at 7:30 p.m tonight.

DUP Reminds May Her Deal Lacks Support (3:12 p.m.)

The Democratic Unionist Party reminds May that her deal will struggle to get approval in Parliament. The party’s deputy leader, Nigel Dodds, says in a statement that rather than presenting Parliament with a “binary choice,” May should work to secure a better agreement.

May Heads to Brussels for Talks on Future Ties: Brexit Update

“It is increasingly clear this deal does not have the support necessary to pass the meaningful vote in Parliament,” Dodds says. “Unionists in Northern Ireland, and indeed unionists across the U.K., are appalled at the constitutional implications of the deal.”

Tech Back on Table as Irish Border Solution (1:45 p.m.)

There’s a growing sense that the wording of the document setting out the U.K.’s future relationship with the EU could help pacify Brexiteers in May’s Conservatives who are pushing for technological solutions to solve the conundrum of the Irish border. The document raises the possibility of “alternative arrangements for ensuring the absence of a hard border on the island of Ireland on a permanent footing.”

May’s spokesman, James Slack, told reporters Tuesday that this effectively provides a third route if the two parties fail to broker a deal on the future relationship by the end of the transition in December 2020. That’s in addition to extending the transition or resorting to the backstop arrangement. The problem is, as the government discovered when it investigated the technology option earlier this year, technological solutions for resolving the border issue don’t yet exist, and are unlikely to be ready by 2021.

Talks With EU Enter ‘Crucial’ Final Days (1:08 p.m.)

May briefed her Cabinet as negotiations with the EU “are entering their crucial final few days,” her spokesman James Slack told reporters in London as the prime minister prepares to travel to Brussels for talks with European Commission President Jean-Claude Juncker on Wednesday.

As "intensive talks" continue, the U.K. does not expect the future framework part of the divorce deal to be finalized in the meeting, Slack said. British officials have been in Brussels all week negotiating with their EU counterparts.

Amid splits in May’s Conservative Party over the Irish border, Slack said it is "sensible" to look at alternative arrangements for the frontier.

May Heads to Brussels for Talks on Future Ties: Brexit Update

May will also meet with Scottish First Minister Nicola Sturgeon later Tuesday, Slack said.

For Euroskeptics, ‘Patience is a Virtue’ (11:26 a.m.)

The Pro-Brexit European Research Group has published another document which it says makes the case that leaving the EU without a customs agreement wouldn’t damage trade. It urges May to seek a Canada-style free-trade accord with the EU. The obstacle May always points out is that such an agreement isn’t on offer to Northern Ireland. The ERG doesn’t accept this.

May Heads to Brussels for Talks on Future Ties: Brexit Update

Afterward, the questions focused on the ERG’s so-far unsuccessful attempt to remove May. Jacob Rees-Mogg, chairman, became tetchy when asked why the group’s claims that it had the required 48 supporters had so far proved illusory.

“Patience is a virtue,’’ he told reporters. He and fellow Tory lawmaker Steve Baker said that some colleagues felt the best time to try to remove May was after she had lost the vote on her Brexit deal in Parliament.

Will she lose that vote? “I will vote against the Meaningful Vote; I will vote against the legislation; I will vote against the prime minister,’’ Rees-Mogg said. Unless she can get an opposition party to back her, May needs every Conservative voting with her to have a hope of winning.

Carney Warns on No-Deal Brexit (11:15 a.m.)

During an appearance before Parliament’s Treasury Committee Tuesday, Bank of England Governor Mark Carney said the BOE welcomed the transition arrangements set out in May’s divorce deal. He also warned that no-deal and no transition would be “a large negative shock to the economy” with unprecedented temporary and more persistent effects. He declined to say if no-deal had become more likely, though he reiterated the assessment he made in August that the chance of such an outcome is “uncomfortably high.”

May Returns to Brussels (11 a.m.)

As part of the ongoing negotiations over the future framework, May will travel to Brussels on Wednesday evening for a meeting with European Commission President Jean-Claude Juncker.

May Heads to Brussels for Talks on Future Ties: Brexit Update

After Dominic Raab quit as Brexit Secretary last week, May’s office announced that she would be taking personal charge of the last week of the negotiations.

Business Speaks Up For May’s Brexit Deal (10:45 a.m)

May was applauded when she addressed the Confederation of British Industry on Monday and the stream of support from business continues, with the EEF manufacturing lobby identifying four key areas where her withdrawal agreement delivers on the demands of companies: the implementation period, provisions for frictionless trade, the ability to move skilled workers across borders and regulatory alignment.

“It is vital we avoid a no-deal scenario, the prospect of which would be a disaster for manufacturing,” EEF Chief Executive Officer Stephen Phipson said Tuesday.

The statement followed a survey released by the Institute of Directors, which found that three quarters of 816 members polled want a withdrawal deal to be approved, with only 13 percent favoring a no-deal Brexit.

Spain Threatens to Veto Agreement Over Gibraltar (9:09 a.m.)

Spain does not recognize Gibraltar as part of the U.K. and wants to ensure that future EU talks with the U.K. do not apply to the peninsular.

May Heads to Brussels for Talks on Future Ties: Brexit Update

Spain will vote against the Brexit deal as it stands unless the wording of the agreement is changed with reference to future talks on Gibraltar, Spanish Prime Minister Pedro Sanchez said at an event in Madrid on Tuesday.

Bank of England Names the Date (8:08 a.m.)

The BOE will give the Treasury Committee its assessment of what Brexit could do to the financial system and broader economy on Nov. 29. The report risks angering Brexiteers, who have accused Governor Mark Carney of being biased in favor of EU membership.

Damage limitation under way after DUP Setback

“The best interest of the country as a whole is to have a stable government in Westminster and cooperation between the Conservatives, by far the largest party in government, and the DUP helps deliver that,” Justice Secretary David Gauke tells Sky News. “We want to continue to work with the DUP. I understand the DUP feel very strongly on this matter.”

May Heads to Brussels for Talks on Future Ties: Brexit Update

On Monday evening, the Northern Irish party that props up the Conservatives in Parliament abstained and voted against the government on amendments to the Treasury’s Finance Bill. The move was designed to send a “political message” about its unhappiness with May’s Brexit deal, DUP Brexit spokesman Sammy Wilson told the BBC.


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