Brexit Bulletin: The End of the Beginning

(Bloomberg) -- Today in Brexit: The U.K. and the EU have finally agreed on a Brexit text. Theresa May just has to get it past critics in her Cabinet and Parliament.

After months of hard-fought negotiations, the U.K. and the European Union have come to terms on a draft divorce deal. But Prime Minister Theresa May’s real fight is only just beginning.

During another frantic day of developments on Tuesday, the announcement came that the sides had settled on a text after working through the night in Brussels. Now, as Bloomberg’s Tim Ross, Jess Shankleman, Robert Hutton and Kitty Donaldson report, May has to convince a skeptical Cabinet that it’s not a sellout and overcome what even her team considers near-impossible odds to get the accord through Parliament.

May’s ministers were invited into her office on Tuesday to read the agreement. Today they will be asked to sign off on the deal at a 2 p.m. meeting — though there’s a risk some will resign instead.

The U.K. front pages on Wednesday morning leave little doubt about what’s at stake. The Daily Telegraph calls it the “Moment of Truth’’ while the Daily Mail dubs it “Judgment Day.’’ Meanwhile, in a boost for May, The Sun reported late last night that key ministers including Brexit Secretary Dominic Raab, Foreign Secretary Jeremy Hunt and Environment Secretary Michael Gove will back the plan.

Still, while May won a concession from the EU over the thorniest issue of all — how to prevent a policed border emerging in Ireland as a result of Brexit — the victory came with expensive conditions attached. The whole U.K. is set to remain in the EU’s customs and trade orbit indefinitely, unless a better idea turns up in the next two years.

The pound rose on the breakthrough, though there are more obstacles ahead. May’s hardest task will be to force the deal through the House of Commons, where the arithmetic is looking increasingly challenging. Her critics there, including fellow Conservatives Boris Johnson and Jacob Rees-Mogg, were quick to dismiss the accord on Tuesday, condemning it as a betrayal of the 2016 referendum result. The DUP, the Northern Irish party that props up May’s government, branded it unacceptable.

EU officials cautioned that the deal isn’t done until it gets political sign-off in London. Representatives of EU governments are expected to be briefed on Wednesday. If all goes well, then a summit of leaders could be called toward the end of November. Officials said Nov. 25, a Sunday, was a likely date.

Today’s Must-Reads

  • As Brexit enters a new phase, here’s a look at the uphill battle May faces to get her deal through Parliament. And Emma Ross-Thomas takes you through what else you need to know as we enter the home stretch.
  • Ian Wishart examines how, by signing up to the so-called backstop to avoid a policed border on the island of Ireland, the U.K. may be committing itself to something more permanent. That’s a result that many on the EU side of the negotiations believed – and hoped – would always be the outcome.
  • Negotiations were helped by EU chief negotiator Michel Barnier dropping his opposition to a bare-bones U.K.-wide customs union being written into Britain’s withdrawal treaty, the Financial Times reports.

Brexit in Brief

Legally Bound | May has caved in to pressure from opposition lawmakers to reveal the legal thinking behind her plan for the terms of the U.K.’s divorce, after losing a key battle on Tuesday. With Parliament needing to vote on whether to accept or reject the Brexit accord, the development boosts the risk that her increasingly assertive Conservative Party colleagues will take a look at the official legal advice — and conclude that her arguments for the kind of Brexit she wants are flawed.

EU Preparation | Just as a deal between the U.K. and EU comes into view, the European Commission is ramping up its plans for what will happen if it all falls apart. In a series of contingency notices on Tuesday, the commission said it would prioritize areas including passenger rights, health treatment and border checks. It won’t require U.K. citizens to have visas for short stays in the EU, though this is “entirely conditional” on the U.K. also granting reciprocal visa-free travel to EU citizens. The commission also announced plans to make sure planes have the right to keep flying if Brexit talks fail.

Shooting for a Second Vote | As May started selling her deal to her cabinet on Tuesday night, campaigners for the British people to also have their say on an agreement were holding a rally in London. The event featured parliament members from all sides, including recently resigned minister Jo Johnson, who held an on-stage conversation with former England soccer player and broadcaster Gary Lineker.

Swiss Exit | Swissquote will likely close its London business following Brexit, whatever the nature of the deal, Chief Executive Officer Marc Buerki told Bloomberg on Tuesday. The Swiss bank, which offers online financial and trading services, employs 30 people in London. It bought Luxembourg-based Internaxx earlier this year to ensure it would retain access to European markets after the U.K. exits the bloc.

Worker Exodus | Brexit-related labor shortages are becoming evident, with 132,000 fewer EU nationals working in Britain than a year earlier. The record decline was driven by departing citizens of the eight countries that joined the EU in 2004, according to official statistics released Tuesday.

Pent Up | Land Securities Group is ready to get back to building once Brexit is out the way, according to Chief Executive Officer Robert Noel. The U.K.’s second-largest real estate investment trust, having taken a cautious approach to new projects since 2014, could reverse its policy as soon as Britain leaves the EU.

Cake Fear | Premier Foods wants to make sure Britons don’t run out of Bisto gravy or Mr. Kipling cakes if the U.K. leaves the EU without a deal. The company is building an inventory of packaging materials, ingredients and raw materials in case ports are disrupted after the U.K. departs in March, according to Chief Executive Officer Gavin Darby.

Coming Up | May’s cabinet meeting will dominate the agenda, but she’ll have to endure what could be a tricky Prime Minister’s Questions session before that. Meanwhile the ONS will report the latest inflation figures at 9:30 a.m. in London.

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