Brexit Bulletin: All Together Now

(Bloomberg) -- Today in Brexit: Prime Minister Theresa May is working on a Brexit Plan B. That could mean keeping closer ties to the EU.

Theresa May survived her confidence vote in the House of Commons last night. That much was expected. What she does next, to break the Brexit deadlock, is far less straightforward, and fraught with complications.

Immediately after winning the vote — and 24 hours after Parliament overwhelmingly rejected the Brexit deal she’s spent the past 18 months negotiating with the European Union — May opened talks with the leaders of rival political parties in an effort to end the impasse. She must return to the House of Commons to set out her Plan B by Monday.

She is prepared to dissolve some of her red lines to get her opponents onside, Bloomberg reports today. That could mean keeping closer ties to the EU than she was previously working toward, an outcome backed by opposition parties and long hoped for by other European governments.

The EU welcomes these developments. In fact, it thinks May should have reached out to her rivals much sooner. At December’s European summit, when the prime minister left Brussels without many of the concessions on the deal she was seeking, leaders made clear that a position of national unity was the way forward, according to officials briefed on the discussions. After Monday’s resounding defeat, they now consider it the only option.

The scale of the opposition to the deal means the EU is no longer thinking about offering concessions on small parts of it because it thinks the U.K.’s problems are much more fundamental. The bloc wants May to return only when she has cross-party support. This is no longer about the Withdrawal Agreement — the treaty that sets out the terms of the U.K.’s legal extrication from the EU — but about its vision for post-Brexit ties. If May can get broad political backing, the EU might be willing to revisit the agreed blueprint for future relations. It would also probably be happy to delay Britain’s departure until far later this year.

Of course, it will all be easier said than done. May has already discovered that the price of her opponents’ cooperation could be too high. Rival party leaders quickly began laying down their conditions for taking part last night. For some these included a second referendum on membership of the EU. Her predicament was compounded because Jeremy Corbyn, leader of the main opposition Labour party, refused to take part at all.

Today’s Must-Reads

• In Omagh, near the Irish border, where 29 people were killed in 1998, May’s failure to get her deal is seen as catastrophic.
• Pursuing a softer Brexit risks ripping apart the Conservative Party, Sebastian Payne writes in the Financial Times.
• The Daily Telegraph says it has a recording of Chancellor Philip Hammond’s phone call with business leaders in which he says the “threat” of a no-deal Brexit can be taken “off the table.” 

Brexit in Brief

Hold the Front Page | With the political chaos of Brexit filling their column inches, British newspapers are now having to ensure the country’s drive to leave the EU doesn’t leave them without enough paper and ink. Publishers and paper manufacturers are stockpiling newsprint, ink and other supplies in case the U.K. crashes out of the EU in March without a deal, said Andrew Large, head of the Confederation of Paper Industries. 

Free Flowing | The U.K. government has attempted to reassure businesses that data flows will continue following Brexit, but the risk of an abrupt divorce has caused concerns over the free flow of information. In the event of no deal, the U.K. faces being classed as a ‘third country,’ meaning transferring information would involve thousands of inter-company contracts rather than international laws. 

Keep Preparing | U.K. companies should step up preparations for disruptions to capital, financing, residency status of EU employees, and contractual relationships, major accounting firms are warning their clients. “While today is clearly a moment of high political drama, our advice is simple,” James Stewart, head of Brexit at KPMG U.K. LLP, told Bloomberg Tax. “Keep preparing for no deal.”

Shot in the Arm | The world’s biggest maker of insulin has reserved space on airplanes and is planning to boost stockpiles further to ensure diabetes patients in the U.K. don’t run out of the life-saving medicine in the event of no-deal. Novo Nordisk, the Danish drugmaker, booked some air-freight slots to prepare for the possibility of significant border delays, Pinder Sahota, its U.K. general manager, said in an interview. The company is also aiming to increase stockpiles of insulin to as much as 18 weeks by the end of March, from seven weeks typically.

High Cost | The Amsterdam regional economy would face a medium-term hit of 1 billion euros in case of no-deal Brexit, Dutch news agency ANP reported, citing a letter from the city government official responsible for economic affairs. The Netherlands region is home to thousands of companies that do business with the U.K. 

Underprepared | With 80 percent of Belgian companies unprepared for Brexit of any kind, the government is putting together a package of measures to help businesses in case of no deal. Out of some 25,000 Belgian businesses that trade with the U.K., only about 5,000 are prepared for the customs formalities and extra administrative burden that will come with Brexit, deal or no deal, according to Finance Minister Alexander De Croo.

Sinking Ship | The prospect of a a no-deal split is pushing wealthy Europeans who have made their homes in the U.K. to call it a day and get the movers in. Anthony Ward Thomas, founder of a firm of the same name that specializes in overseas relocation, dealt with 296 moves away from Britain in 2018, an increase of 82 percent. Favored destinations include Paris, Brussels, Zurich and Geneva, as well as southern France and Spanish locations such as Majorca.

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To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Jones Hayden

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