Brexit Bulletin: 100 Days and Counting

(Bloomberg) -- Today in Brexit: With the clock relentlessly ticking down to March 29, both sides are now focusing on “no-deal” contingency plans.

Unless something unexpected happens (and it could — let’s face it, this is Brexit), the U.K. will leave the European Union 100 days from today.

It’s a saga that began in June 2016 with Britain’s referendum, which kicked into gear in March 2017 when the U.K. lodged its formal withdrawal letter, and gathered pace in July 2017 when negotiations began after Theresa May’s catastrophic snap election. It brings us to this point: As of December 2018, there’s still no parliamentary backing in the U.K. for the divorce agreement struck with the EU, and a cabinet minister is warning the government not to “propagate unicorns”.

So that’s 100 days for Prime Minister May to persuade Parliament to support the deal and pass the necessary legislation (and then for the European Parliament to do likewise.)

Or 100 days for the EU to offer some assurances that the agreement isn’t as bad as the majority of British lawmakers seem to think it is.

Or 100 days for the government to decide it wants a different type of relationship with the EU after all.

Or 100 days to get 3,500 troops ready to guard against potential unrest if the U.K. leaves without a deal.

Or 100 days for the U.K. to decide that actually things are in such a mess it can’t leave in 100 days and needs to stay in rather longer. Or not leave at all? Or hold another referendum? An election? A new prime minister?

After the U.K. issued its latest no-deal messages yesterday, the EU will today propose legislation for the same scenario, to keep planes flying and some trade flowing. Meanwhile, back in London, Home Secretary Sajid Javid will today set out the government’s post-Brexit immigration plans. 

Brussels isn’t caught up in the same fevered Brexit excitement as Westminster. After today, EU business will start to wind down for Christmas. So officials now say not to expect too much from the EU side until the New Year. This is despite May’s pleas for help to sell her deal before the House of Commons votes in the week beginning Jan. 14.

Today’s Must-Reads

  • Want an insight into Theresa May’s current negotiating approach? Game theory helps, Mohamed El-Erian writes for Bloomberg Opinion.
  • The prime minister should be trying to break the stalemate, says Jill Rutter of the Institute for Government. Here’s how.
  • Writing in the Daily Telegraph, former Brexit Secretary Dominic Raab says the U.K. should give tax breaks to businesses to help prepare for “no deal,” using the £39 billion ($49 billion) that Britain would otherwise send to the EU.

Brexit in Brief

By the Wayside | May’s deputy David Lidington will start identifying policies to be shelved in order to free resources for a potential no-deal Brexit, The Times reports. Actions are likely to include abandoning benefit sanctions against universal credit claimants, a program to rehire officials from retirement and the suspension of civil-service training, the paper says.

Cold Turkey | U.K. parliamentary authorities held talks on Tuesday with government ministers about whether lawmakers will be recalled from their Christmas break a week early to deal with the Brexit crisis, the Daily Telegraph reports. The House of Commons is due to finish business tomorrow, before returning on Jan. 7. But pressure is growing on May to act, with rumors of an early return on Jan. 2, the newspaper says.

Union Meeting | May will today urge leaders from the devolved administrations to listen to businesses all across the U.K. who have supported the Brexit deal negotiated with the EU. May will meet Scottish First Minister Nicola Sturgeon, First Minister of Wales Mark Drakeford and representatives of the Northern Ireland Civil Service.

Local Difficulty | BAE Systems Chairman Roger Carr, who firmly opposed Brexit before the referendum, said the U.K. defense giant can ride out any challenges as it looks beyond Europe. At BAE’s annual reception in London Carr described Brexit as “a little local difficulty” when set against a global background of social unrest and international tension. That hasn’t stopped the U.K. company from selling fighter planes to Qatar, frigates to Australia and amphibious landing craft to the U.S. Marine Corps, he said.

Lacking Investment | Only once before since the Brexit vote have big investors been as negative on U.K. stocks. Fund managers’ allocation to U.K. equities has crashed to a 39 percent underweight, the lowest on record after March of this year, according to a monthly survey by Bank of America Merrill Lynch. Data last week showed the nation’s equity funds have lost $9.8 billion in 2018. Meanwhile, U.K. stocks are poised for their worst year since the financial crisis of 2008.

Brexit Bulletin: 100 Days and Counting

Temporary Truce | Senior Brexiteers have declared a temporary truce with May, according to the Times. Pro-Brexit Conservative lawmakers made clear that they would not back Labour’s attempts to oust the government while the Democratic Unionist Party also indicated that it would give May time to negotiate with the EU in a bid to get rid of the Irish backstop, the paper says. Battle could recommence in the new year.

First Aid | Health Secretary Matt Hancock is taking no chances with medical supplies in the event of a no-deal Brexit. His department has secured a plane to bring in drugs by air if there are delays at ports. In an amusing twist it will fly to Birmingham from Maastricht, Rob Hutton reports — the Dutch city that lent its name to one the EU’s most significant, and controversial, treaties.

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