Brexit Bulletin: Pick a Name

(Bloomberg) -- Today in Brexit: Theresa May is dropping increasingly obvious hints that she’s prepared to go for a customs union to get a deal with Labour. 

What’s Happening?

Theresa May and Jeremy Corbyn look like they’re edging toward an agreement that would keep the U.K. in the customs union after Brexit. They just have to find a new name for it.

The prime minister spent Wednesday afternoon dodging questions and indicating that she’s heading for a customs union with the European Union — though she wriggled around the semantics of the term. Her spokesman said the government was “hopeful” that a deal could be reached with Corbyn’s Labour party, which has long called for staying in the EU’s trading system.

“It’s all too often framed in terms of existing language,” May told a panel of skeptical lawmakers on Wednesday. “Often people will use the term ‘customs union’ but have in their mind different things.”

It’s worth remembering that terminology that looks a lot like a customs union is already hiding in the Brexit deal May struck with the EU last year, which she hasn’t been able to get through Parliament. The political declaration on the future relationship pointed to fairly deep ties on trade — without putting a name on it, which could have been toxic back home. 

“The Parties envisage comprehensive arrangements that will create a free trade area, combining deep regulatory and customs cooperation,” the declaration says. “The economic partnership should ensure no tariffs, fees, charges or quantitative restrictions across all sectors, with ambitious customs arrangements.”

Talks with Labour could still go wrong, and the outcome of the local elections on Thursday could be a factor. One last big meeting between the sides is planned next week. If a deal isn’t possible, then Parliament will once again have to vote on various Brexit options and try to find a position that can win a majority.

But European Parliament elections are looming on May 23 and Nigel Farage’s Brexit Party isn’t just seeking to lure Tories: The veteran populist is also targeting Labour voters frustrated with stasis on Brexit. May’s best hope is that Corbyn calculates it’s in his party’s interest to deliver Brexit and move on.

Today’s Must-Reads

• May’s Conservatives face big losses in local elections today
• This time they really matter, as the margin will offer a clue as to Labour’s chances in a general election, writes Matt Singh
• Parliament’s other battle: the Palace of Westminster is overrun with vermin, and they’re getting increasingly brazen, reports Alex Morales  

Brexit in Brief

Williamson Fights Back | Gavin Williamson, whom May fired from his job as defense secretary for revealing secret discussions about Huawei Technologies Co., swore that he wasn’t responsible for the leak. It looks like the fight isn’t over. That’s bad news for May and her effort to stamp her authority on a cabinet that’s become so porous that Brexit discussions are in the public domain within minutes.

Contracts Canceled | The U.K. government canceled contracts for additional shipping in the event of a no-deal Brexit. The cost to the taxpayer? About £50 million ($66.3 million). May defended the expense as lower than it would have been if the ships had been needed. 

Beyond Our Power? | May warned that avoiding a no-deal Brexit isn’t entirely in the U.K.’s power. If Britain asks for another extension beyond Oct. 31, it would be up to the 27 remaining EU countries to decide whether to grant it. She didn’t mention the option of revoking the whole process—the other way to avoid a no-deal.

Serious Preparations | One country that’s still taking the prospect of a messy exit seriously is Ireland. The country is spending a “very significant amount of money” to prepare, according to International Development Minister Ciarán Cannon.

On the Markets | The pound strengthened amid growing signs there could be room for a deal to be done, trading at $1.3047 early this morning. The Bank of England is expected keep interest rates on hold at its meeting today. Meanwhile, investment funds based in the U.K. lost £30 billion in the year to the end of March amid Brexit uncertainty, the Financial Times reports.

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To contact the editor responsible for this story: Anne Swardson at aswardson@bloomberg.net, Leila Taha

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