Barnier Rejects Key Bits Of May's Plan But Says Talks Go On

(Bloomberg) -- European Union Brexit negotiator Michel Barnier rejected the key elements of Theresa May’s plan to overcome one of the thorniest divorce questions, but said talks continue.

Barnier welcomed the fact that the U.K. government had put its plan for avoiding a hard border on the island of Ireland in writing. But he had some objections: he said it can’t be time-limited, shooting down one of the conditions that’s key for Brexit supporters in May’s Cabinet.

He also called for the U.K. to set out how it intends to keep rules aligned on either side of the border -- a requirement to avoid checkpoints. And he raised questions about whether the so-called backstop solution, designed to avoid a border emerging if all else fails, can apply to the whole of the U.K. May wants it to, because the Northern Irish allies that prop up her government are demanding it.

His comments put the ball back in the U.K.’s court. He is meant to meet Brexit Secretary David Davis on Monday. It’s bad news for May, who fought colleagues and risked a major political crisis at home to get the current text approved.

The Irish border issue has the potential to derail the whole divorce deal. While both sides say they want to keep the border between Northern Ireland and the Republic of Ireland open, the proposals each side has come up with to achieve that are unacceptable to the other side.

The pound fell after Barnier’s comments but then retraced after he sent a tweet clarifying that he wasn’t rejecting the text outright.

Barnier called for "pragmatism" on each side, and came back to the EU’s own proposal for the backstop, which he said does answer all the questions.

Tensions are rising ahead of a crunch EU summit on June 28, which is the last meeting of the bloc’s leaders before October, when both sides say they want the divorce deal to be sealed.

"We want to make progress because June is important stage in consolidating the confidence we need for orderly withdrawal," Barnier said.

©2018 Bloomberg L.P.