Brexit Bulletin: Does Johnson Have the Votes?

Brexit is 13 days away.

(Bloomberg) --

Today in Brexit: After weeks of negotiations and brinkmanship, a Brexit deal is in the bag. Now comes the hard part.

What’s happening? Boris Johnson got his Brexit deal. Now the prime minister faces a moment of hard political reality: He still needs to sell it to Parliament back in London.

A beaming Johnson visibly enjoyed his moment of triumph in Brussels on Thursday. He saluted France’s Emmanuel Macron on his way into the European Council chamber and hugged Luxembourg’s Xavier Bettel, the man who empty-chaired him in Luxembourg just a few weeks ago. Back then, a deal of any sort seemed an unlikely prospect.

The deal Johnson now needs to sell is a harder-edged version of the pact his predecessor Theresa May struck with the EU almost a year ago. In place of the hated “backstop” comes a concession to a customs border in the Irish Sea, designed to quarantine Northern Ireland and protect the EU’s single market. There is also a mechanism to allow the region’s assembly to end the arrangement, a move that could align Northern Ireland more closely with the EU in years to come. It was a leap too far for the Democratic Unionist Party, which won’t back the new deal. 

The numbers are now very tight. Without a functioning majority, Johnson needs to keep his Conservatives on side, make up with old friends (21 lawmakers were expelled from the party for rebelling in September) and woo new ones, such as Labour MPs representing solidly Brexit-backing constituencies. As Bloomberg’s Rob Hutton outlines, Johnson must win 320 votes but can rely on the votes of just 259. 

Three months after winning power by pledging to leave the EU “do or die” on Oct. 31, the British prime minister is halfway to his goal. Yet defeat in Saturday’s historic vote could trigger a new phase of this political crisis, write Bloomberg’s Tim Ross and Kitty Donaldson: a push for no-deal that leads to a legal challenge, a Brexit extension through gritted teeth, a hotly contested general election or even a new referendum.

This story isn’t over yet.

Today’s Must-Reads

• From diplomatic disaster to a deal without the DUP. Bloomberg’s Tim Ross, Ian Wishart, Kitty Donaldson and Dara Doyle  have the inside story of how the Brexit deal was sealed.
• Amid all the back-slapping, the U.K. has made some concessions that it may regret in future, Lionel Laurent writes for Bloomberg Opinion. Meanwhile, Therese Raphael asks if DUP leader Arlene Foster has finally overplayed her hand.
• The Daily Telegraph was rarely kind about May, but among a plethora of celebratory pieces this morning is an editorial giving its full-throated backing to the deal Johnson (the newspaper’s former employee) secured.

Brexit in Brief

Labour Rejection | Labour leader Jeremy Corbyn called for a second referendum, saying that Johnson’s deal — which he described as a “sell-out” — was worse than that put forward by May. Keir Starmer, the party’s Brexit spokesman, insisted that level playing field provisions outlined in the non-binding political declaration don’t offer enough protection.

The Cost | The latest deal will be better for economic growth than nothing at all, but worse than the agreement reached by May, according to analysis by Dan Hanson and Jamie Rush in Bloomberg Economics. “A free-trade arrangement is no substitute for the single market,” they said.

Business Reaction | British businesses were quick to make their voices heard, urging a quick ratification of the deal. “It is now up to members of parliament to play their part and finally end the Brexit uncertainty that has been hanging over consumers and retailers,” said Andrew Opie, director of food and sustainability at the British Retail Consortium.

Back to the Courts | The lawyer who spearheaded successful challenges to Boris Johnson’s Brexit plan is preparing another lawsuit. Attorney Jolyon Maugham hopes to use what he sees as a legal breach in taxation legislation to secure more time for Parliament to scrutinize the agreement.

Pound at Crossroads | A historic pound rally was stopped in its tracks by doubts over whether Johnson can get his deal through Parliament. Sterling gave away most of its early gains throughout Thursday after nearing $1.30 after the deal was announced. Pessimism over what happens next is putting its 5% gains over the past week in doubt.

BOE Reaction | If Johnson secures backing for his Brexit deal, then interest-rate hikes are on the table for the Bank of England, Deputy Governor Dave Ramsden tells Bloomberg’s Lucy Meakin and David Goodman. A smooth exit from the EU would mean “limited and gradual” increases are needed despite the damage caused by months of uncertainty. The BOE will also ramp up market monitoring following Saturday’s vote.

Betting the House | The forecasts are coming in already: Johnson will lose Saturday’s vote on his Brexit deal by seven votes, according to Sporting Index, a firm that established its political credentials by correctly calling the results of earlier votes. The Financial Times projects defeat by 321 votes to 318.

Nigel, Meet Hilary | Perhaps the unlikeliest alliance of the day was arch-Brexiteer Nigel Farage complaining that the Johnson deal rides roughshod over the law of the land… the Benn Act, named after Remain-backing Labour lawmaker Hilary Benn and designed to thwart the no-deal Brexit Farage himself advocates.

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To contact the editor responsible for this story: Chris Kay at ckay5@bloomberg.net, Alyssa McDonald

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