Brexit Bulletin: Escape From Victory

(Bloomberg) -- Today in Brexit: Theresa May’s victory looks short-lived, as the bruised leader now faces a struggle to get her deal through Parliament.

After seeing off an attempt by her Conservative Party colleagues to oust her, Prime Minister Theresa May is staggering on to yet another showdown.

Late Wednesday, the embattled premier won a vote of confidence in her leadership among Tory MPs by 200 to 117 — a margin that both proved her credentials as one of the great survivors in politics and reinforced the scale of the challenges to come. May is now set to head to a summit in Brussels on Thursday to seek concessions on her Brexit deal that can help her sell it to a hostile Parliament — where the unfavorable arithmetic hasn’t changed.

Brexit Bulletin: Escape From Victory

As Bloomberg’s Alex Morales, Tim Ross, Kitty Donaldson and Robert Hutton report, this win has also come at a personal cost. In an emotional private meeting with her critics before the ballot, May said she would not be leading them into the next election in 2022 — a concession that one Cabinet minister said was a necessary compromise. That point was hammered home by Thursday’s U.K. front pages, many of which questioned how long May will now last.

A more pressing issue is that, in a little over three months, the U.K. will be leaving the European Union with or without an agreement to cushion the blow. The size of yesterday’s rebellion — which was bigger than some expected and comprised more than a third of May’s MPs — underlines the battle the prime minister faces in getting her deal approved by Parliament. In the Telegraph on Thursday, May’s pro-Brexit former adviser Nick Timothy said there was no doubt her deal is still dead.

To resurrect it, she needs concessions on the Northern Ireland backstop, an insurance policy to ensure the border remains open with Ireland even if the U.K. and the EU can’t strike a trade deal. The prime minister’s Democratic Unionist Party allies and critics among her own Conservatives say it will split Northern Ireland from the rest of the country, an unacceptable outcome.

May’s efforts to persuade the EU to make concessions have so far drawn a blank. She met on Tuesday with Dutch Prime Minister Mark Rutte, German Chancellor Angela Merkel, EU Council President Donald Tusk and European Commission head Jean-Claude Juncker. They gave similar messages: the EU is open to providing assurances, but won’t reopen talks on the substance of the deal, and won’t make the backstop temporary, as the U.K. seeks.

Instead, EU leaders are planning to issue a statement that they hope will offer May some cover in Parliament. They’ll say the bloc will “use its best endeavors to negotiate and conclude expeditiously a subsequent agreement that would replace the backstop,” according to a draft obtained by Bloomberg, and they’ll pledge to explore further assurances if needed.

Still, May remains in a bind, as getting Parliament to pass her deal likely requires more than warm words. If the prime minister cannot get her exit terms approved by U.K. lawmakers, yesterday’s triumph will mean little, and the nation will be on course for a no-deal Brexit and the economic and political chaos that follows.

Today’s Must-Reads

  • After May’s victory, pro-European ministers in her Cabinet are now plotting to secure a Brexit they can live with. Six ministers have urged May to force Parliament to vote informally on a range of outcomes, Bloomberg’s Jessica Shankleman, Robert Hutton and Alex Morales report.
  • As London’s financial clout fades in the wake of Brexit uncertainty, U.S. financial powerhouses such as JPMorgan Chase and Goldman Sachs are dominating investment banking overseas as never before.
  • Amid the drama in the U.K., spare a thought for EU officials, who spent the day looking on in disbelief. Meanwhile, as the Guardian reports, British businesses are becoming increasingly desperate for clarity.

Brexit in Brief

Housing Slowdown | Brexit is continuing to batter the U.K. housing market. An index of prices by the Royal Institution of Chartered Surveyors slipped in November to the weakest level since 2012, while the outlook for pricing and sales for the next three months slumped.

Paying to Stay | U.K. employers from Heathrow airport to the London School of Economics are hoping to stave off a post-Brexit exodus of lower-level immigrant workers by covering their application fees for permission to stay on.

Scottish Ploy | Away from Westminster, the British government faces yet another Brexit case on Thursday — this time at the Supreme Court in London. At issue is a question that goes to the heart of the United Kingdom’s constitutional setup: Can Scottish First Minister Nicola Sturgeon lawfully pass her own rival Brexit bill?

No-Deal Preparation | Germany is trying to mitigate market turmoil from the U.K. leaving the EU without a deal by giving British financial firms a chance to continue operations in the country and making relocation more viable. Meanwhile, London’s derivatives clearinghouses could be allowed to continue serving big banks in the bloc for 12 months after a no-deal Brexit.

On the Markets | The pound had its best day in six weeks on Wednesday, even if it gave up some of its gains after the margin of May’s win was announced. Still, the road ahead could be rockier, according to Bloomberg’s Katherine Greifeld, Vivien Lou Chen and Austin Weinstein.

Brexit Endgame | So, what comes next? Bloomberg’s Emma Ross-Thomas provides a guide to what happens now we’re entering the most perilous part of Brexit.

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