Theresa May, U.K. prime minister, and Tim Barrow, U.K. permanent representative to the European Union (EU), depart following a European Union (EU) leaders summit in Brussels, Belgium. (Photographer: Jasper Juinen/Bloomberg)

Brexit Ministers Davis and Baker Quit in Blow to May

(Bloomberg) -- U.K. Prime Minister Theresa May was plunged into a major crisis after key members of her government quit in protest over her plans for a soft exit from the European Union.

Brexit Secretary David Davis and his deputy, Steve Baker, resigned late on Sunday in a double-blow to the premier’s negotiating strategy and her grip on power. Junior Brexit minister Suella Braverman also resigned, the Guardian reported. A new secretary would be announced on Monday, May’s office said.

Brexit Ministers Davis and Baker Quit in Blow to May

“The general direction of policy will leave us in at best a weak negotiating position, and possibly an inescapable one,” Davis wrote in his resignation letter to May, which was released by her office. May’s plan to adopt EU regulations for all goods and agri-food products after Brexit “hands control of large swathes of our economy to the EU and is certainly not returning control of our laws in any real sense,” he said.

The resignations of Davis and Baker came just two days after the premier announced she had secured the backing of her cabinet for a plan to keep close ties to the European Union after leaving the bloc. Davis and Baker, both longstanding euroskeptics, decided they couldn’t support the policy, a person familiar with the matter said.

‘More Uncertainty’

As the minister responsible for the Brexit negotiations, Davis is a major voice in the debate in the U.K. The double resignation late on Sunday has the potential to derail May’s government and set in motion a chain of events that could lead to an attempt to oust her as prime minister. Their decision may embolden pro-Brexit lawmakers to make a move against her.

Brexit Ministers Davis and Baker Quit in Blow to May

“There is no doubt it is a blow, given at the end of the last week it seemed things moving in the direction of -- perhaps you could call it unity,” said Mitul Kotecha, a senior currency strategist at TD Securities in Singapore. “Now, there is more uncertainty about what this is going to mean going forward.”

The pound fluctuated on the news of Davis’s departure.

Davis, Baker and other pro-Brexit members of May’s Conservative Party have deep concerns about her plans for keeping the U.K. tied to EU rules for goods and adopting a close customs arrangement with the other 27 member countries. They say Britain should have a clean break from the bloc and be liberated to pursue new trade deals with other countries, as well as to make its own laws, free from European influence.

Parliament’s Decision

In her reply to Davis, May insisted her plan would deliver on the referendum result and the party program from last year’s general election.

“I do not agree with your characterization of the policy we agreed at cabinet,” she said. “Parliament will decide whether or not to back the deal the government negotiates, but that deal will undoubtedly mean the returning of powers from Brussels to the United Kingdom.”

The resignations came at a critical and highly sensitive time for May’s strategy, as she seeks to make progress in negotiations with the EU. A divorce agreement is due to be wrapped up in just 15 weeks, but there are still major obstacles to overcome.

She achieved a rare consensus in a key cabinet meeting on the way forward for the negotiations with the EU. That agreement, at her Chequers country retreat, was meant to kick-start talks that have been stalled for months.

Second Thoughts

Davis and fellow Brexit backer Foreign Secretary Boris Johnson both agreed to support May’s proposal for a softer divorce than she had originally planned, and it seemed she had survived the storm. Johnson’s allies said on Saturday that he decided not to quit because he wanted to remain in the government to fight for the kind of Brexit for which he had campaigned.

The prime minister will have a crunch meeting with members of her Tory party to discuss her plan in Parliament on Monday evening. Some lawmakers have already expressed their misgivings.

May has survived crises before, including threatened leadership challenges. Although U.K. politics is volatile, the pro-Brexit camp in Parliament would likely struggle to get the numbers together to win if May decided to stay and fight. Even so, “there needs to be a rebuilding of trust,” Bernard Jenkin, a pro-Brexit backbench Conservative lawmaker told BBC radio on Monday.

“There’s been a massive hemorrhage of trust over the last few days,” he said. “In all my meetings with the prime minister I never expected this to be the result,” he said of May’s Brexit policy.

And even if they succeeded, a new leader would be stuck with the same lack of a parliamentary majority that has forced May to adopt a softer split from the bloc than the one she originally planned.

First Resignation

This is her first cabinet resignation over Brexit and with just eight months to go until exit day and the stakes are high. If she can’t reassert her authority, the move could trigger a chain of events that result in a general election.

Over the weekend May sought to bind Brexit supporting ministers to her proposal as they were sent out to tell the media that they backed it.

Trade Secretary Liam Fox put his name to a newspaper article backing the plan, and Environment Secretary Michael Gove defended the agreement in a TV interview.

“I’m a realist,” Gove told the BBC on Sunday, admitting he didn’t like everything about May’s proposal. “One of the things about politics is that you mustn’t, you shouldn’t, make the perfect the enemy of the good. And one of the things about this compromise is that it unites the Cabinet.”

But in a sign of the trouble to come, Jacob Rees-Mogg, chairman of the European Research Group of Tory lawmakers, said May’s plan was “defeatist” and he would oppose it. “If the proposals are as they currently appear, I will vote against them and others may well do the same,” he said in an article for Monday’s Daily Telegraph newspaper.

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