Brexit Catchup: What You Missed Over the Christmas Break

(Bloomberg) -- After three weeks of respite, British politicians return to Parliament on Monday to grapple with the seemingly intractable problem of navigating the U.K.’s path out of the European Union.

Prime Minister Theresa May’s divorce deal looks set to be defeated in a vote in the House of Commons later in January. With just three months to go until Britain’s scheduled exit date of March 29, that would put the country on course to crash out of the bloc with no agreement in place.

Here’s a round-up of developments since Parliament broke up for the Christmas break:

1) Phoning Friends

May has spent the break calling her EU counterparts in an attempt to persuade them to help her get the deal through Parliament. She postponed the Commons vote last month in the face of certain defeat and now wants the EU to spell out in a fresh legal text exactly how the most contentious part of the divorce accord will work.

Critics of her plan fear the U.K. could be trapped indefinitely in the backup arrangement for the Irish border, effectively keeping the whole country inside the EU’s customs union trade rules. The premier is hoping for a new legal definition to reassure her critics that the so called Irish backstop will be "temporary."

May’s office has refused to say exactly who she’s spoken to, but reports have leaked to the U.K. media of two phone calls with German Chancellor Angela Merkel. She’s also spoken to Spanish Prime Minister Pedro Sanchez while Irish premier Leo Varadkar, French President Emmanuel Macron and European Council President Donald Tusk are likely to have been on her list.

2) No Compromise

The calls are yet to yield fruit, with May’s office saying more work is needed. After a lunch with May on Thursday, Democratic Unionist Party Deputy Leader Nigel Dodds issued a statement saying his party was still deeply unhappy with the Brexit deal. The DUP is vital to May’s hopes because she relies on the support of the small Northern Irish party for a majority in Parliament.

The EU and the DUP appear to be locked in a stand-off with May stuck in the middle. European leaders say they won’t reopen the text of the withdrawal agreement and the DUP says simply tinkering around the edges won’t be enough.

3) Ships Wanted

If May can’t get her agreement through Parliament, the default is for Britain to crash out of the bloc so the government has stepped up its no-deal contingency planning.

The preparations aren’t going smoothly. After ministers announced contracts worth 108 million pounds ($137 million) to charter extra ferries for freight shipments between Britain and mainland Europe, it emerged that one of the winning companies didn’t own any ships. Nor had the company ever operated ferries, and it appeared to have copied the terms and conditions on its website from a fast-food chain.

4) Business Fears

Before Christmas, Britain’s five leading business lobby groups issued a joint warning that a no-deal Brexit would lead to "severe dislocation and disruption." Businesses, they said, were "watching in horror" as politicians bicker.

5) Political Pressures

May has said that if lawmakers reject her deal, then no deal or even no Brexit are increasingly likely. A YouGov poll on Friday showed that members of her Conservative Party would prefer a no-deal Brexit to her deal, or to staying in the EU. What about the main opposition Labour Party? A separate poll found that 72 percent of party members want their leader Jeremy Corbyn to push for a second referendum, something he has so far resisted.

6) What Next?

In a new year’s message, May predicted the U.K. will "turn a corner" if Parliament backs her Brexit deal in a vote slated for the week beginning Jan. 14, though this still looks unlikely.

The House of Commons will resume debating the terms of the deal on Jan 9, with a vote promised the following week. If May’s deal is defeated, she could try to wring more concessions out of the EU and put it to another vote -- but in the meantime, the clock ticks down to Brexit day on March 29.

©2019 Bloomberg L.P.