Brexit Bulletin: 10 Days

(Bloomberg) -- Today in Brexit: It’s shaping up to be a milestone week for Brexit talks.

The race is on to get a deal. Brexit Secretary Dominic Raab is due in Brussels this week with a new offer to break the deadlock, and on Wednesday, there’s a crucial meeting of ambassadors from the 27 European Union states ahead of a full summit next week. There are two big stumbling blocks: the Irish border and an outline of what future trading ties might look like.

Prime Minister Theresa May is pushing to keep the whole U.K. aligned with the EU’s customs rules temporarily as a way of solving the Irish border problem. And while EU diplomats haven’t completely rejected the idea, they are worried that the U.K. is trying to stay in the bloc’s trading regime by the back door.

Back home, lawmakers find it hard to believe that the temporary setup wouldn’t become permanent, shackling the U.K. to the EU indefinitely and thwarting Brexiteers’ dreams of becoming global free-traders. But May got some good news late on Sunday. Brexiteers are prepared to let the prime minister cut a deal that maintains EU customs rules until the next election in 2022, the Times reports. The EU doesn’t want a solution to the Irish border to have a sell-by date, but there could be room for some careful wording.

International Trade Secretary Liam Fox also provided some encouragement last week for May from the Brexiteer camp, saying that the priority is to leave, even if the deal isn’t perfect.

Wednesday — in theory — is a deadline for any new U.K. proposals. If there’s good progress in October, EU leaders could sign off on the deal in November. That’s when the really hard part starts. May will have to take the agreement to Parliament, where she faces opposition on all sides.

Her whips are so worried about getting enough votes that they’ve been courting Labour. The Telegraph reports that ministers have spoken to as many as 25 Labour lawmakers. We reported last week that the whips want to avoid passing the deal with a wafer-thin majority. They plan to rush the deal through Parliament in as little as two weeks, in an attempt to head off a rebellion and get it done by early December.

Before we get too excited that we’re in for an easy December, Fabian Zuleeg, chief executive of the European Policy Centre think tank in Brussels, predicts there will be an upset first:

Brexit Bulletin: 10 Days
Fabian Zuleeg@FabianZuleeg
Choreography to Withdrawal Agreement: 1) positive noises now on May backstop offer allows calling Nov Summit 2) dom……

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Today’s Must-Reads

  • Check out this guide to the countdown to Brexit’s moment of truth: what’s happening, and when
  • ICYMI: The EU is said to be ready to offer the U.K. a “super-charged” free-trade deal, but it will only include 30-40 percent of Theresa May’s negotiating position, Ian Wishart reports.

Brexit in Brief

SNP for Second Referendum | The leader of the Scottish National party said her 35 lawmakers in London would vote for a second referendum, adding to momentum for a redo of the vote. Nicola Sturgeon told the BBC that lawmakers of all parties should seek an alternative to a “cobbled together” Brexit deal. Sturgeon wants to stay in the single market and customs union.

Brexit Planning | The European Central Bank has told financial institutions to limit their reliance on back-to-back booking models by 2022, the Financial Times reports. The back-to-back setup would have helped maintain staff and capital in London after Brexit.

Irish Upbeat | Irish Foreign Minister Simon Coveney told Sky News on Sunday that he thinks a deal will be done, because the consequences of not doing so are so bad. He said the divorce agreement is 90 percent done.

Something’s Moving | European Commission President Jean-Claude Juncker said in comments released on Saturday that he assumes a deal will be done. “I have reason to believe that the potential for the two sides to converge has increased in the past days,” Juncker said. “But it’s not yet clear whether we’ll get a deal in October. If not, we are going to do it in November.”

On the Markets | Some kind of compromise this week that opens the door to a workable divorce would boost the pound, Bloomberg’s Garfield Reynolds writes. Sterling was little changed at $1.3102 in early trading.

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