Brexit Bulletin: Deadlock, With a Day to Go

(Bloomberg) -- Today in Brexit: Talks are deadlocked in Brussels, as May looks headed for another defeat of her Brexit deal this week.

Theresa May has less than 24 hours to wrest concessions from the European Union to save her Brexit deal, or else see the divorce she's fought for since 2016 being diluted or even reversed.

It’s not looking good for the prime minister, and that means more political drama, with leadership speculation swirling once more. But the chaos that would follow another defeat of her deal on Tuesday could throw up an option that markets and business would consider positive. Pound investors are already expecting Parliament to vote for a delay this week, and would welcome some of the options that might emerge, such as a softer Brexit with cross-party support, or a second referendum. They’d be less pleased by some of the other options – a leadership struggle, a general election, or maneuvers to push the country toward a no-deal Brexit later this year.

Talks were meant to continue over the weekend in Brussels, but no one senior was there and there wasn’t much sign of activity, Ian Wishart reports. Negotiators are already indulging in blame-avoidance exercises. Chief EU negotiator Michel Barnier published some new-looking proposals on the Irish border on Friday. It turns out the U.K. side had already rejected them days earlier.

May was expected to possibly jump on a plane early Monday to bring back something for her vote on Tuesday. A U.K. spokesman said there are no such plans yet. The prime minister spoke by phone to European Commission President Jean-Claude Juncker on Sunday night, and talks remain deadlocked, the spokesman said.

On Friday, with discussions increasingly acrimonious, the EU side sounded like they had given up. If they don’t think what they can offer will get the deal over the line, there’s no point wasting a concession, goes the thinking. Since May gave Parliament the power to postpone exit day, the pressure to avoid a no-deal catastrophe has eased, and the 11th hour has slipped back a few months.

Here’s what you missed over the weekend:

  1. Cabinet minister Andrea Leadsom told Bloomberg that Parliament could get more opportunities to vote for the deal after Tuesday if Brussels came up with new concessions. 
  2. The Sunday Times says May has been told she may have to resign to get Brexit through; the Telegraph says just two cabinet ministers support her. Four leadership rivals are ready to go, the Times says.
  3. Foreign Secretary Jeremy Hunt says a second referendum is a serious threat, as he tries to get Brexiteers onside.
  4. Labour MPs pushing for a referendum on May’s deal met with Brexit Secretary Steve Barclay, the Observer reports. They want lawmakers to vote for the deal, on the condition she puts it to a referendum. This is the “Kyle-Wilson” amendment – one to watch.
  5. The Labour leadership won’t put down an amendment for a second referendum this week. It wants the vote on Tuesday to be all about May’s deal and “exposing the weakness of the prime minister,” Brexit spokesman Kier Starmer says.
  6. The Times says MPs are telling May to pull the vote, as they expect another three-figure defeat. 

Today’s Must-Reads

  • Theresa May should announce her resignation on Brexit day, the Times’ Philip Collins argues.
  • Banks have been told to strengthen their buffers before Brexit, the Financial Times reports. 
  • Check out Bloomberg’s Brexit Barometer, a gauge of how the U.K. economy is doing. It’s been in “rainy” territory now for three months, the first time it’s been that weak since just after the referendum.

Brexit in Brief

Not Negotiating | If there was any doubt negotiators weren’t doing much work this weekend, Michel Barnier himself was at the rugby.

Brexit Bulletin: Deadlock, With a Day to Go

Pushing for Discounts | One in five businesses in the EU is expected to push for a discount from U.K. suppliers after Brexit, according to a survey by the Chartered Institute of Procurement & Supply. And border delays of only one day could mean canceled contracts for about one in 10 British exporters, the report found.

Another Japanese Company Quits | Shionogi, a Japanese pharmaceuticals company, plans to move its European HQ from London to the Netherlands because of Brexit, the Financial Times reports. 

Decision Time | French European Affairs Minister Nathalie Loiseau said it’s time for Britain to make a decision about its exit and a delay would lead to uncertainty. “If there is nothing new, more time won’t add anything apart from more uncertainty, and uncertainty leads to anxiety,” Loiseau said. “We don’t need time, we need a decision.” Still if Britain wants to renegotiate a deeper future relationship, for example in the single market, the EU “would be stupid not to say yes.” The soft-Brexit camp will be pleased.

Backing for No-Deal | A ComRes poll indicated that public support for leaving the bloc without a deal has risen to 44 percent, according to the Telegraph.

Aston Martin vs Porsche | Aston Martin said it would honor the price of cars ordered before March 29 whatever happens with Brexit. The move comes after Porsche’s U.K. unit told customers they might have to pay as much as 10 percent more than expected if the country tumbles out without a deal.

On the Markets | A Bloomberg survey shows the most likely scenario is that May’s deal fails to pass and Parliament votes in favor of a delay to the process. This could usher in a pound move up to $1.33. Early on Monday, the pound weakened to $1.2984.

Brexit Bulletin: Deadlock, With a Day to Go

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