Brexit Bulletin:  How Long Can an Endgame Last?

(Bloomberg) -- Today in Brexit: The end is in sight, but not in reach. 

Theresa May says talks are in the “endgame,” and chief EU negotiator Michel Barnier says the outline of a Brexit deal is clear. But as negotiators work through the night to get the thing completed, both sides are warning that the last bit is the hardest. And so another week passes, and with it another deadline is missed.

Wednesday was seen by the British as the last chance for the prime minister’s Cabinet to sign off on a deal if they wanted to get the agreement wrapped up at a special European Union summit in November. That seems to have slipped, though her team continue to say they are hoping for a deal in the “autumn.” The Sun reports that officials are holding out hope for a summit on Dec. 4-5, which would just about give lawmakers time to get the deal through Parliament by Christmas.

The pound fell 1 percent on Monday amid disappointing Brexit headlines. The question now is whether markets will step up the pressure on politicians and force them into action. Speculators have a long history of forcing governments to change tack. If a deal doesn’t make it to Parliament until January, any votes on it could happen in the midst of a market meltdown. That might concentrate minds but would probably also mean more economic damage along the way. 

“It feels like market pressure will have to get worse before there is a compromise,” Elsa Lignos, global head of currency strategy at Royal Bank of Canada, wrote on Monday.

Adding to the sense of crisis, the opposition Labour Party is pushing for the government to release legal advice it has received on the Irish border backstop — and whether May’s offer could end up trapping the U.K. in the EU’s customs and trade orbit forever. Labour is using a trick it’s successfully showed off before, called a humble address.

As more lawmakers look at the small print of the deal that’s being negotiated, the risk for May is that the number of supporters she can corral keeps falling. They were looking pretty bad to start with.

The Cabinet meets today, but we’re told not to expect them to be presented with a deal. Watch instead for any no-deal plans, and more signs that ministers are standing up to their prime minister.

Today’s Must-Reads

• How does Brexit play into the EU elections? Ian Wishart takes a look.
• With May facing pressure from all sides, here's how the Brexit endgame could actually play out.
• The EU is playing chicken with the U.K. and Italy, two of its biggest and most powerful members, and they are coming home to roost, John Authers writes for Bloomberg Opinion.

Brexit in Brief

May Said No | Theresa May turned down the latest draft of a Brexit deal with the EU after negotiators worked into the early hours of Monday morning, the Sun reported.

Ministers for No Deal | A group of Cabinet ministers led by Brexit Secretary Dominic Raab will tell May that the current deal on offer from the EU is unacceptable and she should prepare for no-deal if she can’t secure more concessions, Buzzfeed reports.

Unprepared | More than a third of U.K.’s small- and medium-sized businesses see the pound dropping at least 10 percent after Brexit, but almost none of them are preparing for it.

What’s the Cost | Anti-Brexit lawmakers Chuka Umunna and Anna Soubry have proposed an amendment to the Finance Bill to try to force the government to release an economic impact assessment of the Brexit deal — compared with the status quo — before it goes to parliament for a vote.

Getting the Papers | Labour’s maneuver to get the government to release full legal advice aims to show up Conservative divisions, Rob Hutton reports. But it could also make it harder for May to get the final deal through Parliament. Pro-Brexit Tories suspect that the proposed “backstop” on the Irish border is a trap from which the U.K. would be unable to escape. Lawmakers of other persuasions are coming around to the same idea. Pro-Brexit lawmakers are also making a bid to get the papers released, the Sun reports.

New Presidency | Romania is set to take over the rotating EU presidency in January. The country’s gaffe-prone Prime Minister Viorica Dancila could be at the helm in the final stages of Brexit.

Blair and Brown | Former Prime Ministers Tony Blair and Gordon Brown weighed into the Brexit debate on Monday. Brown predicted there would be a second referendum, and Blair said May’s deal would fail in Parliament. Both campaigned for Remain and Blair is leading the fight for another vote.

Making Plans | May said in a foreign policy speech last night that her “first trade mission post-Brexit” would be to the Asia-Pacific next spring. That sounds like she’s making plans to keep going, though many in her party are hoping she’ll head for the door after delivering Brexit.

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To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Jones Hayden

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