An anti-Brexit demonstrator waves a Union flag, also known as a Union Jack, with a European Union (EU) flag outside the Houses of Parliament in London, U.K. (Photographer: Simon Dawson/Bloomberg)

Brexit Postponement Said to Be an Option If Talks Get Messier

(Bloomberg) -- Senior European Union officials have informally discussed whether the U.K. might need to stay in the bloc past March 2019 if Brexit negotiations don’t accelerate over the summer.

With work on keeping the Irish border invisible effectively at an impasse and discussions on the foundations of a future trade deal barely out of first gear, officials in Brussels have privately questioned whether the talks will finish on time, three people familiar with the conversations said. A deal is needed if the U.K. is going to get the 21-month post-Brexit transition period.

A move to extend the deadline, which Article 50 of the EU Treaty sets at two years after a formal notice to leave the bloc, would have to be requested by the U.K. and agreed to unanimously by the 27 remaining EU governments. While officials acknowledge that an extension is still unlikely, they don’t think the rest of the bloc would oppose the move as long as the prolongation was for a short period, for example two months, according to the people, who spoke on condition of anonymity because the talks are private.

Negotiating Time

An extension to the negotiating time would potentially hand a lifeline to U.K. lawmakers who want to retain the closest possible ties to the EU. Prime Minister Theresa May could decide to ask for an extension rather than risking a “cliff-edge” no deal.

Any postponement would be a significant development, as May has staked her reputation on Britain leaving the bloc on March 29, 2019. U.K. politics took a dramatic turn this week, only adding to the sense that discussions might need more time.

The dysfunction in Westminster continues. May’s government is set for another showdown with the pro-EU lawmakers in her Conservative Party next week as talks aimed at a compromise broke down, and with it any remaining trust between the rival factions.

EU and U.K. negotiators in Brussels are trying to finalize the Brexit separation treaty and provide a detailed outline of the two sides’ future relationship in areas such as trade, financial services and security cooperation. They aim to conclude a deal in October so that the British and European parliaments have enough time to scrutinize and ratify the agreement.

Off Track

Among the concerns on the EU side is that there still won’t be an accord by the time EU leaders hold a summit on Oct. 18-19. Even if talks don’t go off track to such an extent that they need to be extended, EU officials increasingly see them not being concluded until December, a fourth person familiar with the matter said. This would probably still provide enough time for ratification before March 29, the person said.

“There are a number of different scenarios that could arise if we’re in a ‘no deal’ situation,” Irish Prime Minister Leo Varadkar said in an interview with broadcaster TV3 on Monday. “For example, it is possible to extend Article 50, to allow more time for negotiations to take place.”

Officials on both sides acknowledge there is still a huge amount of work to do over the summer months. And little progress is expected on issues such as the border on the island of Ireland before the EU leaders’ next meeting, on June 28-29, one of the people said.

The two sides are “talking past each other” on many issues, particularly on the Irish border backstop solution -- an obligatory part of the withdrawal agreement -- and even preliminary work on the future relationship is making little progress, Ivan Rogers, former U.K. ambassador to the EU, told lawmakers on Tuesday in London.

‘Not Ready’

Conservative lawmaker Phillip Lee, who on Tuesday quit his government post to vote against the government in Parliament, said in his resignation statement that “if Brexit is worth doing it is worth doing well.” The government should “recognize the U.K. and EU are not ready for Brexit and pause, extend or revoke Article 50 so that we do not leave before we are ready,” he added.

While the EU might be willing to accept a short, time-limited extension of the negotiation period, governments are unlikely to allow a lengthy prolongation, the people said. There are two reasons for that: the determination to keep pressure on the U.K. to decide what it wants; and the long list of other problems that EU leaders know they might have to deal with next year, including the ongoing fight with President Donald Trump over trade and the rise in populism in the region.

©2018 Bloomberg L.P.