Brexit Deadlock Continues as EU Rebuffs Theresa May’s Demands

(Bloomberg) --

U.K. Prime Minister Theresa May and her top lawyer will travel to Dublin on Friday as she races to forge a breakthrough with European leaders resisting changes to their Brexit plan.

Following a day of tense talks in Brussels on Thursday, May plans to dine with Irish Prime Minister Leo Varadkar on Friday evening, while her attorney general, Geoffrey Cox, will meet counterpart Seamus Woulfe in the morning to discuss the contentious issue of the Irish border.

On Thursday, May and senior EU officials set a new deadline in an attempt to break the impasse that threatens to send the U.K. crashing out of the bloc next month without an agreement. The two sides’ negotiating teams are to resume talks and May will assess progress with European Commission President Jean-Claude Juncker before the end of February.

With just 49 days to go until the U.K.’s scheduled departure from the EU, getting Varadkar on side will be crucial for May’s efforts to find a solution for the future of the Irish border that has become the biggest obstacle to a deal.

‘Do Everything’

May and her cabinet will spend the coming days meeting leading EU figures to convince them to change the divorce deal in a way that would be supported by a majority of politicians in the U.K. Parliament.

In London on Friday, Chancellor of the Exchequer Philip Hammond will host German Vice Chancellor Olaf Scholz, a day after Chancellor Angela Merkel said the EU must “do everything” to avoid a no-deal Brexit. On Monday, U.K. Brexit Secretary Stephen Barclay will meet with EU chief Brexit negotiator Michel Barnier for further talks.

After U.K. parliamentarians last month rejected the agreement May brought back from Brussels in November, she is demanding changes to the so-called Irish border backstop arrangement. While the backstop was designed as an insurance policy to prevent a hard border on the divided island of Ireland, it’s also become the most contentious part of the divorce deal because it effectively keeps the U.K. bound to EU rules.

Time Limit

But, with the EU rebuffing May’s requests on Thursday, there’s no clear solution in sight. European Commission President Jean-Claude Juncker told May he didn’t want to reopen their divorce deal, according to a joint U.K.-EU statement.

“We must secure legally binding changes to the withdrawal agreement to deal with the concern Parliament has over the backstop,” May told reporters in Brussels. “Taking back changes to the backstop, together with the other work we’re doing on workers’ rights and other issues, will deliver a stable majority in Parliament and that’s what I’ll continue to work for.”

According to three European officials, May asked several times for the EU to include a time limit on the backstop in a meeting with Juncker and Barnier on Thursday. They rejected the idea.

Down to the Wire

Another person, familiar with the U.K. side of the negotiations, had a different summary of the meeting. May raised all three options that she’s considering for changing the backstop: alternative arrangements including technological solutions; a time limit; and a unilateral exit clause. She didn’t express a preference for any of the three, the person said.

The deadlock raises the prospect of the negotiations going down to the wire. EU officials said there are currently no plans to arrange an emergency EU summit -- necessary if there are changes to the deal or if May asks for Brexit to be delayed -- before a scheduled gathering of leaders March 21-22.

That would be just a week before exit day, and would further fuel the sense of panic and despair among British and European businesses that are pouring resources into contingency measures they hope they’ll never have to use. A no-deal exit would plunge businesses into a legal limbo, snarling trade and damaging economies on both sides.

“Still no breakthrough in sight,” EU President Donald Tusk tweeted after his meeting with May. “Talks will continue.”

The EU said the Brexit divorce deal -- which contains the backstop -- isn’t up for renegotiation, but that the political declaration focusing on future relations can be revised. There are questions over whether that would satisfy U.K. members of Parliament because the declaration isn’t legally binding and wouldn’t remove the need for the backstop.

A U.K. official said May is also planning to seek further meetings with other U.K. parties after Labour leader Jeremy Corbyn on Wednesday offered to work with her if she committed to staying in a customs union in order to avoid the backstop. The letter he sent May sparked a backlash in his own party as it didn’t mention the option of a second referendum.

--With assistance from Kitty Donaldson and Tim Ross.

To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net;Jessica Shankleman in London at jshankleman@bloomberg.net

To contact the editors responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net, ;Ben Sills at bsills@bloomberg.net, Stuart Biggs

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