Brexit Bulletin: Running Out of Time

Brexit is 28 days away.

(Bloomberg) --

Today in Brexit: The negotiations get serious.

What’s happening?  After making his pitch to the European Union yesterday, Prime Minister Boris Johnson will start trying to win support in Parliament for a Brexit deal that until recently would have been rejected both by hardliners in his own Conservative Party and lawmakers from Northern Ireland.

How far has he moved? Johnson has ditched his predecessor’s hated Irish backstop and promised to take Northern Ireland out of the EU’s customs union, meaning some form of customs checks will be necessary. To soften the blow, he wants to put a regulatory border in the Irish sea, effectively splitting Northern Ireland from the rest of the U.K. — a step his predecessor, Theresa May, couldn’t accept. Belfast’s politicians will have a veto over the new arrangements, but it’s not clear what would happen should they exercise it. In place of the backstop, we have a question mark.

Is Johnson serious? He says the “broad landing zone” for a deal is clear and the prime minister appears to have squared his own allies — both Tory euroskeptics and the Democratic Unionist Party look to be falling into line. The best that can be said about the EU’s response is that it wasn’t an outright rejection. Commission President Jean-Claude Juncker said there were “problematic points.” Ireland was blunter, criticizing the proposed replacement for the backstop. It looks like Johnson’s move is the start of a negotiation rather than a take-it-or-leave ultimatum, but it’s hard to see how he has enough runway left to reach an agreement before his deadline at the end of the month for leaving the EU.

And if it fails? At his party conference on Wednesday, Johnson repeated his promise to leave the EU without a deal if necessary. Given Parliament has legislated to block that outcome, any attempt to try would almost certainly end up in court. 

At best, the coming days will mark the start of an intense final round of negotiations; at worst, both sides are positioning themselves for the inevitable blame game if a deal fails to materialize. For Johnson, the risk is that if he can’t get this latest proposal through Brussels and Westminster, an extension looks increasingly certain. The EU would be willing to countenance that outcome, but it would be much more difficult for a prime minister who promised to deliver Brexit on Oct. 31 “do or die.” 

Today’s Must-Reads

• Britain’s latest Brexit proposals are a provocation, not progress, according to Bloomberg Opinion's Lionel Laurent.
• Will the latest plan break the impasse? Dara Doyle, Bloomberg's Dublin bureau chief, looks at the likely sticking points.
• Brussels may circumvent Johnson to grant an extension, according to the Times’s Bruno Waterfield.

Brexit in Brief

Failure of Statecraft | Boris Johnson sets out his five principles to break the Brexit deadlock.

Labour Help | As many as 25 Labour Members of Parliament may support the deal, giving Johnson the majority he needs for his plans, according to the Daily Telegraph.

Good Odds | Within hours, Johnson’s de facto deputy, Michael Gove, appeared confident of a “pretty solid majority” in Westminster behind the proposal. Speaking to ITV’s Robert Peston show, he said there’s a very good chance of the deal getting through the U.K. Parliament.

Construction Woes | The U.K. building industry shrank for a fifth consecutive month in September, a casualty of Brexit uncertainty.

Fusion | In his conference speech, Boris Johnson lavished praise on Britain's fusion reactor in Culham. Tom Chivers from Unherd points out that the Joint European Torus happens to be heavily funded by the EU ⁠— and threatened by the U.K.'s decision to leave Euratom.

Electric Dreams | No one can figure out Brexit ⁠— so Morgan Stanley let a machine try. The Wall Street bank has unleashed a computer model to map the fallout from Britain's exit from the EU. The good news? A no deal Brexit isn't quite as bad as some feared. 

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

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