Brexit Bulletin: What Would Trump Do?

(Bloomberg) -- Today in Brexit: Donald Trump is back in London, and the rivals to succeed Theresa May rehash the old arguments.

What’s Happening?

President Donald Trump is coming to town, and once again is giving Britain advice about Brexit and talking about the “very big trade deal” that will be on offer once the country finally breaks free from the European Union.

Trump’s escalating trade war makes his offer of a deal with the U.K. even more problematic than it seemed when he visited a year ago. Back then the president criticized Prime Minister Theresa May’s Brexit plan and backed her rival Boris Johnson. This time around his support for Johnson plays directly into the Tory leadership race.

May’s 2018 blueprint for Brexit is now dead, and we’re no further forward on how to solve the problem of the Irish border. There’s a strong sense of deja vu from the plans put forward by rivals jockeying for May’s job. Renegotiate the Irish border backstop? May tried that. Wield the threat of no-deal? May tried that. Find a deal that can pass Parliament without opposition votes? Same.

Three years after the 2016 referendum, Brexit is once again a domestic matter: The 13 candidates are hashing out their visions with little apparent regard for how Brussels might respond. Many of them want to renegotiate a deal that the EU has said can’t be reopened. One is trying to reverse Brexit. Here are some key positions:

  • Boris Johnson has been pretty quiet so far. His plan, set out the day May quit, is to renegotiate, and be prepared to leave with no deal. Oct. 31 should be the cut-off, he said. According to the Times, he has lost potential pro-EU ally Amber Rudd. He’s the bookies’ favorite, and Trump’s.
  • Environment Secretary Michael Gove is a Brexiteer who is willing to compromise. He hasn’t yet set out his plan, but the Telegraph reports that he’s prepared to delay Brexit until late 2020 rather than leave without a deal.
  • Foreign Secretary Jeremy Hunt has been accused of flip-flopping (he’s an ex-Remainer). He says no-deal would be political suicide as Parliament would try to force an election instead. He also wants to change or remove the Irish backstop.
  • Ex-Brexit Secretary Dominic Raab wants to rewrite the backstop. If it can’t be changed, he will be “clear” that the U.K. is prepared to leave without a deal.
  • Home Secretary Sajid Javid is pushing for alternative arrangements for the Irish border. He’s also signaling compromise though: He doesn’t want a deadline extension but recognizes he may be forced into one.
  • Health Secretary Matt Hancock wants to leave on Oct. 31 with a deal but then try even harder to find an Irish border solution. He’s presenting himself as the candidate of business, and the one who is engaging with Brussels — he  says the EU is open to his plan for the backstop. He says the threat of no-deal isn’t credible.
  • Andrea Leadsom, who quit May’s team last month, says the EU won’t renegotiate so it’s time to prepare for no-deal on Oct. 31. She wants to discuss a “properly managed exit” with EU leaders.
  • Sam Gyimah, the former universities minister, has a different pitch and it’s one that can’t fly given the pro-Brexit bias of the Conservative electorate: He wants a second referendum.

Today’s Must-Reads

Brexit Bulletin: What Would Trump Do?

Brexit in Brief

What’s at Stake | Bloomberg Economics estimates the difference between a no-deal Brexit and no Brexit at all in terms of economic output is about 7% of GDP by 2030.

Don’t Do It | That’s why the Confederation of British Industry is trying to talk Tory candidates away from no-deal. The CBI wrote an open letter last week telling them that no-deal would lose the party its moniker as the party of business.

Banks on the Move | Deutsche Bank AG and UniCredit SpA moved some of their swaps trades from London to Frankfurt in May as banks used a lull in the ongoing Brexit drama to prepare for the worst.

Trump’s Advice | U.S. President Trump has some advice for the U.K.: appoint Nigel Farage as Brexit negotiator, refuse to pay the bill and walk away unless the bloc offers a fair deal.

Trump to Meet Farage | Trump is aiming to meet with Brexit Party leader Farage during his state visit to the U.K. in what would be another snub to the British government, Tim Ross reports. Farage told the Daily Express that May’s office had banned him from meeting Trump. But the president has told his officials he is inclined to ignore that ruling.

On the Markets | Sterling fell for a third month against the dollar in May and touched its weakest level since January versus the euro on May 31. There’s little data on the horizon to help the pound and the risk of a hardline Brexiteer as prime minister. It traded at $1.2633 early on Monday.

Brexit Bulletin: What Would Trump Do?

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