Brexit Bulletin: Crunch Time

Brexit is 30 days away.

(Bloomberg) --

Today in Brexit: The U.K. government has completed the draft text of a deal. Now it needs to get it through the EU and Parliament.

What’s Happening? As the U.K. enters what could be its final month in the European Union, Prime Minister Boris Johnson is facing a moment of truth for his Brexit strategy.

In a crucial move yesterday, Johnson’s officials finished working on a draft legal text of a Brexit deal, aimed at resolving the impasse between the U.K. and the EU. The reception his plan receives will determine whether there is any hope of securing an orderly exit on Oct. 31. If not, Johnson will face a choice between seeking another delay—something he says he will never do—or trying to force the country out of the EU with no agreement, which his opponents in Parliament have moved to stop. The Telegraph reported last night that Johnson will reveal his plan to EU leaders within 24 hours.

Any agreement must clear two hurdles,  in that it must gain the approval of both Parliament and the EU. There were some signs of progress on the former yesterday: Staunch Brexit supporters in the Conservative Party, who helped defeat previous prime minister Theresa May’s deal three times, hinted they could back an agreement if Johnson secures one. Their view is that’s better than suffering an election defeat to Labour and its party leader, Jeremy Corbyn.

Still, it’s not clear whether Johnson’s latest strategy for ensuring there are no checks on goods crossing the land border between the U.K. and Ireland will be agreed to by Brussels. Irish broadcaster RTE reported late Monday that the U.K. is proposing customs checks five to 10 miles away from the border, a plan that may be rejected by the EU side. Irish Foreign Minister Simon Coveney said today that what has been put forward so far is a non-starter.

Meanwhile, Chancellor of the Exchequer Sajid Javid took center stage at the Conservative Party conference on Monday, offering a pay rise to low earners, as the party seeks to win votes in the next election. As he did the interview rounds before his speech, Javid also pledged a major fiscal response if Britain leaves the EU without a deal, indicating that he also expects the Bank of England would also assess the need for monetary support.

Back in Westminster, Johnson’s opponents are continuing to work against him. Politicians determined to stop the prime minister from leaving with no accord have hit upon a constitutional trick that relies on Queen Elizabeth II to fire him via a so-called Humble Address, according to a person familiar with the matter.  Bloomberg’s Kitty Donaldson and Jessica Shankleman explain the arcane process here.

Today’s Must-Reads

• Hedge fund manager Crispin Odey dismissed allegations that Johnson’s links with investors like him amount to a conflict of interest.
• A veteran of Johnson’s political campaigns has resigned as a Downing Street political adviser amid rising tensions in the prime minister’s administration, the Guardian reports.
• Businesses are warning against “normalizing” a no-deal Brexit. The leader of the Confederation of British Industry told Bloomberg’s Alex Morales that it is impossible for companies to fully prepare for such a scenario.

Brexit in Brief

Doubling Down | The pound’s recent rally is flashing a sell signal to JPMorgan Chase & Co. The bank recommends selling the British currency against the Swiss franc, given that the odds of an exit accord by the end of October are “very low” and the odds of a “hard” Brexit by January have increased. 

Conference Catch-Up | Javid wasn’t the only speaker at the Tory conference in Manchester yesterday. Catch up with our rolling updates before Johnson makes his own speech on Wednesday.

Better Shape | Fears that British consumers could be forced to slash their spending in a disruptive Brexit were partially allayed by new figures Monday showing that households are saving a larger proportion of their disposable income than previously thought. A separate report showed consumer borrowing fell last month, more evidence that shoppers are tightening their belts before the Oct. 31 deadline.

Border Explainer | The Irish border, and backstop, have become one of Brexit’s most intractable issues. Read Bloomberg’s Peter Flanagan’s essential guide to both if you need a refresher. 

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To contact the editor responsible for this story: Anne Swardson at aswardson@bloomberg.net, Leila Taha

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