Brexit Bulletin: Just Another Manic Monday

Brexit is 52 Days away.

(Bloomberg) --

Today in Brexit: It’s Monday, so Boris Johnson will try to come up with a solution to the Irish backstop and call an election.

What’s Happening? Boris Johnson isn’t expected to back down from his hardline Brexit strategy quite yet, even with the threat of legal action hanging over him if he refuses to seek another delay to Britain’s departure. This morning he heads to Ireland, for his first face-to-face talks with Irish counterpart Leo Varadkar. In the afternoon he’s expected to return to the House of Commons to ask lawmakers for a second time to back his plan for an early general election. It’s another tricky day for the British prime minister.

Varadkar is standing firm on the Irish border issue which has dogged the Brexit talks for so long. On Sunday he lowered expectations, warning the U.K. is “very optimistic” if it expects the EU to consider dropping the backstop arrangement to protect the free flow of goods across the Irish border. He said that he doesn’t expect any breakthroughs in Monday’s talks.

Back in London, MPs who fear a no-deal Brexit on Oct. 31 still oppose allowing Johnson to hold an election earlier that month. If anything, splits in Johnson’s Conservative party are getting wider. Amber Rudd’s resignation as work and pensions secretary on Saturday night made clear that the 21 Tories who rebelled against Johnson last week still have sympathisers within the government. On Twitter, ex-finance minister Philip Hammond continued to rebrand himself as a straight-talking, anti-no-dealer with a sharp takedown of Health Secretary Matt Hancock (and, by turn, the Tory party in general.)

Rudd’s departure set tongues wagging about who else might jump ship from Johnson’s cabinet. The future of anybody leaning that way is likely to be determined by how Johnson, and his chief adviser Dominic Cummings, handle the new Brexit delay law, passed by Parliament last week. BuzzFeed News reported that a Tory WhatsApp group was alive with calls for Johnson simply to ignore the law; the Daily Telegraph reports today that Downing Street spent Sunday plotting “sabotage;” Dominic Raab and Sajid Javid went on Sunday TV talk shows sounding tough, but leaving some wiggle room.

Johnson’s renewed bid for an early election could be the final action in the House of Commons before the government suspends Parliament until mid-October. Amid the tumult, the prime minister was boosted by weekend opinion polls giving the Tories a strong lead over Labour. (A 14-point lead via YouGov for the Sunday Times, and a 10-point advantage in an Opinium survey for the Observer.)

Today’s Must-Reads

• Boris Johnson insists his priority is still to get a Brexit deal rather than leave without one on Oct. 31. But what’s really going on?
• “Johnson’s Tories are not the Brexit Party, but they are the party of Brexit.” Robert Colville makes a case for Johnson’s policy in the Times.
• ICYMI: Predicting the upcoming election will be fiendishly tricky, polling expert Matt Singh wrote for Bloomberg Opinion. “What makes this election so different is the way this uncertainty manifests itself in so many moving parts.”

Brexit in Brief

Recession Risk | Monetary and fiscal policy won’t support the U.K. economy in the event of a recession, the Resolution Foundation think tank warns today, saying the next downturn could be “unnecessarily painful.” The warning comes as KPMG predicts a recession if the U.K. leaves the EU without a Brexit deal. Official figures due at 9.30 a.m. U.K. time are expected to show the toll no-deal Brexit fears are taking on businesses and consumers, with economists forecasting GDP barely grew in July.

Will France Say No? | France isn’t prepared to postpone the Oct. 31 Brexit deadline “in the current state of things” without evidence of new solutions to end the deadlock, French Foreign Affairs Minister Jean-Yves Le Drian said. “We won’t start over again every three months. Let the British Parliament, let the British authorities tell us what’s the path.”

Wider Impact | Economic growth in Germany will fall to zero if the U.K. leaves the EU without a Brexit deal, the Federation of German Industries (BDI) said on Sunday. “Economic uncertainty remains high,” the group said.

Citi Sanguine | Citigroup is already operating on a “post-Brexit basis,” David Livingstone, the U.S. banking giant’s European chief, told the Telegraph, expressing disappointment that the financial-services industry failed to carve out a more central place in the debate over the shape of Brexit. Nevertheless, “London is and remains our regional hub,” he said. “The EU is the bigger market but the U.K. has by far the biggest financial center.”

Bercow Under Fire | The Conservatives plan to run a candidate against House of Commons Speaker John Bercow at the next election, Business Secretary Andrea Leadsom wrote in the Mail on Sunday, breaking a long-standing convention not to oppose the speaker’s re-election. Brexit-backing Tories are furious at Bercow for his handling of the Brexit saga.

Want to keep up with Brexit?

You can follow us @Brexit on Twitter and join our Facebook group, Brexit Decoded. For all the latest news, visit bloomberg.com/brexit. Got feedback? Send us an email.

To contact the editor responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Iain Rogers

©2019 Bloomberg L.P.