Brexit Bulletin: Looming Defeats

(Bloomberg) -- Today in Brexit: Theresa May is seeking a deal with her opponents, but knows a likely drubbing in looming local and European elections will further undermine her authority.

What’s Happening?

It’s back to the negotiating table once more.

Talks between Theresa May and the opposition Labour Party on breaking the Brexit impasse continue this week, with Conservative Party Chairman Brandon Lewis saying Sunday that there’s still time for Parliament to settle on a deal before the U.K. participates in EU elections on May 23. (A government official has said that’s unlikely.)

For its part, Labour insists it’s not “dragging its heels” in the talks and that the government has refused to budge on any of its red lines, the party’s business spokeswoman Rebecca Long-Bailey said on Sky News on Sunday. Long-Bailey also hinted that Labour would be prepared to back a Brexit deal even if it comes without a commitment to a new public vote. Labour holds crunch internal talks tomorrow on whether to include such a pledge in its European election manifesto.

May’s problem is that the Tories are on course for a bruising if the European elections go ahead, facing punishment from voters for failing to deliver Brexit. They’re also contesting local elections this Thursday, where forecasts also point to a thumping.

Two shockers at the polls will only increase the pressure on May’s already precarious premiership, stoking further anger among the party’s grassroots and intensifying plots to oust her. So far the prime minister has hung in there in a desperate effort to get Brexit over the line. Whether her party will tolerate two symbolic electoral drubbings is another matter.

Today’s Must-Reads

• The Bank of England will unveil a new round of economic forecasts this week. Just don’t expect Governor Mark Carney to apologize for his pre-Brexit predictions, write Bloomberg’s David Goodman and Lucy Meakin
• While May’s Conservatives are consumed by Brexit, opposition leader Jeremy Corbyn is talking about the issues Brits actually care about, Clare Foges writes in The Times
• The looming Tory disaster in the local and European elections will be at the hands of voters furious Britain is still in the EU, Matthew Goodwin, professor of politics at Kent University, says in the Sun

Brexit in Brief

On the Markets | Brexit is likely to threaten the pound’s status as a global reserve currency, according to a survey of central bank money managers reported in the Financial Times. Reserve managers are likely to cut their sterling holdings, which would weaken the currency and raise borrowing costs for the government.

Growth Stifled | The slow-burn impact of Brexit will be a drag on U.K. growth for the rest of 2019, according to economics forecaster EY Item Club. That will block the BOE from raising interest rates on Thursday, they predicted.

Holiday Away | Fewer British holidaymakers have opted for a summer holiday inside the EU this year because of the ongoing Brexit uncertainty, says travel firm Thomas Cook. Bookings for non-EU destinations are up 10 percent on last year, though Spain is still its most popular destination, Thomas Cook said.

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To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Leila Taha

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