Brexit Bulletin: Now for the Hard Part
(Bloomberg) -- Today in Brexit: The deal is done, but the road ahead is strewn with obstacles.
So that’s it then. Yesterday, Prime Minister Theresa May won the backing she needs from her Cabinet to say that the U.K. and the European Union have agreed to the draft Brexit treaty. But it’s far from the end of the story.
As the U.K. debates whether May can survive given the opposition to her plan from her own ranks, EU member states warn of serious concerns about some of the agreement’s content. France, Germany and other governments are likely to use a meeting of ministers in Brussels on Monday to demand stricter conditions to ensure the U.K. doesn’t use the opportunity of a U.K.-wide customs union to gain a competitive advantage.
There were smiles, of satisfaction and relief, on the faces of both sets of negotiators last night, but there’s serious work still to do. A leaders’ summit that EU President Donald Tusk has called for Sunday, Nov. 25, to sign off on the agreement won’t be plain sailing. EU diplomats say they recognize that they now have maximum leverage over May’s government.
After a day of high drama, Bloomberg has comprehensive coverage of the latest on Brexit in London, Brussels and across Europe.
We set out how May is fighting for her political life as a growing revolt from within her own party threatens to derail her plans and force the U.K. out of the EU with no deal. At least two senior ministers are said to be considering quitting, while scores of Conservative members of Parliament are lining up to vote against the accord that her Cabinet grudgingly agreed to. There are even reports that a coordinated plot to oust May as U.K. leader is gathering pace.
What’s actually in the agreement? It covers Champagne, data, nuclear material, banks, at least 39 billion pounds ($51 billion), and runs to more than 500 pages.
We consider May’s short speech outside No. 10 Downing Street. There was no joy in her voice. Indeed her words, the tone of the delivery, only go to show that it may have been a hollow victory.
We report that as soon as the Cabinet meeting was over the government tried to win the backing of business leaders. The chancellor of the exchequer and business secretary called company executives with the news.
See what it did to sterling: The pound edged higher after May’s announcement but failed to hold the day’s strongest levels.
- The outcome of the Brexit talks exposes the myths around what Britain was going to achieve as the government misread the EU, Alan Crawford writes.
- The customs union “backstop” plan has so many flaws it practically has a self-destruct mechanism, the Financial Times says.
- The Guardian looks at how the negotiators made the breakthrough after telling diplomats from the rest of the EU to “trust us.”
Brexit in Brief
No Rest | The City of London averted one disaster with the draft Brexit deal announced on Wednesday. But the obstacle course is far from over. Even if the U.K. Parliament clears the agreement — and that’s still far from a sure thing — negotiations on a new financial rulebook will continue well into 2020. The bottom line is that banks, brokers and asset managers will continue to prepare for the talks going off the rails.
Health Warning | The U.K.’s National Health Service faces a shortage of about 350,000 employees in little more than a decade, partly due to “restrictive immigration policies exacerbated by Brexit,” the Financial Times reports, citing warnings from three leading health-think tanks.
Challenges Ahead | Credit-rating agency Moody’s said the divorce agreement still faced considerable hurdles. Some challenges remain and the Brexit process will continue for some time, the agency said in a report.
Alarm Bells | The telecommunications industry is taking no chances with Brexit, bracing for a scarcity of vital equipment, a potential recession and a fragile investment climate. Executives at two of the phone companies with most at stake from Brexit — BT and Telefonica — made it clear they were preparing for the worst.
Growth Warning | As Wednesday’s Cabinet meeting was taking place, the International Monetary Fund renewed its warning to the U.K. about the costs of a disruptive exit from the EU. The IMF, which sees the U.K. economy expanding about 1.5 percent this year and next assuming a smooth transition to a free-trade agreement, says the biggest threat to the outlook is the possibility of a no-deal Brexit, which would disrupt asset prices and have a “large negative impact” on growth.
Political Divide | Bloomberg Opinion’s Therese Raphael says the prime minister hasn’t just given her own party an ultimatum to back her Brexit deal with Brussels, she’s also handed Labour an equally difficult choice.
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