Brexit Bulletin: What Might Have Been

(Bloomberg) -- Today in Brexit: Theresa May has another go at getting the deal through Parliament—on what should have been departure day.

Britain should have been waking up this morning to its last ever day as a member of the European Union after 46 years. Instead, through a combination of political missteps, indecisiveness and confusion, March 29 has arrived with the country still not knowing whether it will leave next month, the month after, next year or not at all. Nor on what terms.

Today’s date had been set in stone for so long. Theresa May – after taking office but before calling an unnecessary general election – triggered Article 50 of the Lisbon Treaty, the EU’s exit clause, two years ago today. Loud voices in the U.K. and the EU were pressuring her to do so, but many now believe she did it too early.

The election three months later changed everything, when she lost her majority and had to rely on the support of Northern Ireland’s hard-line Democratic Unionist Party.

When negotiations with the EU started, she was already on the backfoot. The EU, having been preparing its positions, unifying and working out negotiating tactics for months, pressed home its advantage, and May never recovered.

The die was cast in December 2017, the end of the first phase of negotiations. Desperate to move on and start talking about other matters, the U.K. agreed to “specific solutions” for the island of Ireland in order to prevent a hard border, or, alternatively, to “maintain full alignment” with the EU’s single market and customs union rules. 

May’s first attempt to sign that agreement was thwarted when DUP leader Arlene Foster interrupted the prime minister’s lunch at the European Commission with a call to say she didn’t support the move. A fudge followed, but the failure by members of Parliament to come to terms with what the U.K. had signed up to that day –  it later became known as the “backstop” – sowed the seeds of today’s turmoil in Westminster.

May is now on her third Brexit secretary, each one unable to squeeze the concessions they wanted out of the EU. When the deal was finally struck in November, it was a matter of days before the government said it might not work. In December, EU leaders sent “clarifications” that the backstop wasn’t a trap that would keep the U.K. permanently wedded to its rules. Earlier this month, May won “legally binding” assurances, but there was still no unilateral escape route to appease pro-Brexit MPs and the DUP.

So what now? The clock has ticked to Brexit day, but the U.K. is still as much in the EU as it ever was. Arguments rage in Parliament,  not only over the backstop, but over the fundamental question of how close Britain’s relationship to the bloc should be. Many inside the EU think that should have been answered more than two years ago. Perhaps May will, against the odds, get her deal passed today. But if not, European governments are divided over whether the U.K. should leave without a deal or stay in for a long time.

Only one thing is for sure: No one knows what will happen next.

Today’s Must-Reads

• Here’s your guide to another dramatic day in Parliament
• The Brexit delay came too late for many companies—and now costs are mounting.
• Conservative MP Owen Paterson attacks May’s “wretched deal,” in the Daily Telegraph, saying the U.K. would be “broken up, [and] have laws imposed upon it by a foreign power” with “no unilateral right of exit.”
• The EU is looking at how to approach a no-deal crash-out. Conditions would probably include a U.K. commitment to safeguard an open Irish border, the rights of citizens and paying unpaid bills to the EU’s central budget.

Brexit in Brief

Third Time Lucky? | Members of Parliament will be asked to back the U.K.’s Withdrawal Agreement in a vote today at about 2:30 p.m. London time. Northern Ireland’s DUP and the opposition Labour Party confirmed last night that they would still oppose the deal.

Doom and Gloom | U.K. consumers remained gloomy this month as the political turmoil escalated. GfK’s headline confidence measure held at minus 13 in March, close to its lowest level since 2013. While households reported a slight increase in confidence, they were less likely to think now is the right time to make major purchases, a worrying sign for retailers.

Financial Fracas | The EU faced mounting opposition to its policy restricting access to U.K. equity markets in a no-deal Brexit from  the world’s biggest banks, money managers and the London Stock Exchange Group Plc. The last-minute fracas threatens to disrupt months of cooperation between regulators on both sides to protect financial markets if the U.K. leaves without a withdrawal accord.

Next, Please | Theresa May’s decision to step down—but only after she gets her beleaguered Brexit deal through Parliament—turned up the heat on the leadership jostling in her Conservative Party that’s been bubbling away for months. Bloomberg has taken a look at some of the possible candidates.

Au Revoir | About 46 percent of French people would prefer the U.K. to leave the EU without an agreement, a poll by Opinionway and Tilder found. A higher percentage, 49 percent, would prefer a negotiated departure, according to the poll published Thursday for Les Echos newspaper and Radio Classique. Of those surveyed, 73 percent said Brexit will have no impact on their professional activity.

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To contact the editor responsible for this story: Anne Pollak at apollak@bloomberg.net, Adam Blenford

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