Theresa May, U.K. prime minister, pauses during her bilateral meeting with Mariano Rajoy, Spain’s prime minister, inside number 10 Downing Street in London, U.K. (Photographer: Andy Rain/Pool via Bloomberg)

U.K.'s May Is Said to Face New Brexit Revolt From Johnson

(Bloomberg) -- Prime Minister Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, a split that threatens to undermine her chances of breaking the deadlock in negotiations. 

Foreign Secretary Boris Johnson and Environment Secretary Michael Gove, who together led the Brexit campaign in last year’s referendum, raised concerns about the proposal, according to people familiar with the matter. Johnson aired his worries during a Cabinet meeting on Tuesday.

With just days to go until a deadline to get talks back on track and the pound sliding for a second day, May is also struggling to get the Northern Irish party that props up her government to sign up to her Brexit strategy. Wednesday had been tipped as the day May could head back to Brussels to resume talks that suffered an embarrassing breakdown on Monday.

In an effort to find a solution to the Brexit deadlock and the sensitive Irish border issue, Brexit Secretary David Davis told Parliament he wanted the whole country to remain close to EU economic regulations after the split.

Keeping the whole U.K. close to EU regulation would make it easier to avoid a border on the island of Ireland without putting up a new barrier between Northern Ireland and the rest of the U.K. -- a red line for May’s Northern Irish allies.

Part of the pro-Brexit case advanced by the likes of Johnson and Gove in the last 18 months has been that the divorce will allow the U.K. to break free from EU rules and chart its own course with free-trade deals around the world.

May has until the end of the week to get back to Brussels with proposals that will satisfy the EU that enough has been done on the terms of the separation to move on to the future relationship between the two trading partners. An EU official on Tuesday said it was the "deadline of deadlines." Businesses are clamoring for trade talks to start and to get the transition arrangements in place for after the split.

The Irish government views the chances of a deal this month as falling, according to a person familiar with the situation. Northern Ireland’s Democratic Unionist Party leader Arlene Foster and May didn’t speak on Tuesday by phone as planned, the BBC reported.

Negotiations ended on Monday after a lunch between the prime minister and European Commission President Jean-Claude Juncker was interrupted by a phone call between May and Foster. The DUP rejected what May was set to offer Brussels to unlock negotiations.

The collapse presented May with three unappealing options: change her Brexit policy, risk a constitutional crisis in the U.K., or face the prospect of a no-deal split from the EU. The almost invisible border in Ireland now is only possible because both Ireland and the U.K. are in the European single market.

Both sides were aiming to get close enough to an agreement this week so that a summit of leaders on Dec. 14 can give the green light for talks to move on to the future relationship early next year. As talks broke down on Monday, Juncker was unusually constructive and said he was confident an agreement could be reached by year-end.

Almost 18 months on from the referendum, the Cabinet has yet to set out the future relationship it wants with the EU. Eight months since May triggered the divorce proceedings, negotiations have barely made progress. In March 2019, Britain will leave the bloc, with or without a deal and the longer talks drag on, the greater the chance of a messy exit.

Davis made clear that his proposal doesn’t mean staying in the single market -- as many businesses would like -- and wouldn’t involve a role for the European Court of Justice, a taboo for many Brexit-backers. The role of the ECJ remains a sticking point in talks.

“Regulatory alignment is not harmonization, it’s a question of ensuring similar outcomes in areas where we want to have trade,” Davis told lawmakers in London on Tuesday. “Anything we agree for Northern Ireland in this respect, if we get our free trade area, will apply to the whole country.”

Vocal Brexit supporter Jacob Rees-Mogg put it to Davis that keeping the United Kingdom together and departing from EU rules should both be "indelible red lines,” since ditching EU rules was the point of leaving.

Davis responded: “The red line for me is delivering the best Brexit for Britain and that’s what we’ll do.”

©2017 Bloomberg L.P.