Theresa May, U.K. prime minister, center. (Photographer: Jasper Juinen/Bloomberg)

Leadership Challenge Threshold Still Not Reached: Brexit Update

(Bloomberg) -- Prime Minister Theresa May makes the case for her deal, as she fights off opposition.

Key Developments

  • The threshold of 48 lawmakers to trigger a no-confidence vote in May’s leadership still hasn’t been reached, according to a person familiar with the situation.
  • EU says any extension of transition period should have a maximum cut-off date of end-2022. May’s spokesman says it must end before the next general election, which is scheduled for June 2022.
  • Spain is unhappy with the text of the deal because of Gilbraltar; officials are trying to fine-tune it
  • Still no date set for Parliament to vote on the deal.

The Rock in the Road (4 p.m.)

Gibraltar has emerged as a minor stumbling block at the last minute, and talks are under way to address Spain’s concerns.

The U.K. said on Monday afternoon that it won’t "exclude" Gibraltar from negotiations on the future relationship, after Spain said the disputed territory should be treated differently. Spain said it had been surprised by the draft text, and wants to make sure it has a say before any trade deal applies to Gibraltar.

As we wrote earlier, Spain has a track record of bringing up Gibraltar at key moments. So far, it hasn’t proved an insurmountable challenge.

Brexiteers Still Short of the Threshold (3 p.m.)

Not enough Conservative politicians have sent in no-confidence letters to trigger a leadership vote, according to a person familiar with the situation.

Meanwhile, a delegation of Brexiteers is heading into May’s office. Steve Baker, a leading hardliner, said they are making a "late attempt to change policy and save the PM.” The thing is, right now, the PM doesn’t look in very imminent danger.

Remainers Stand Firm (1 p.m)

It’s not just the Brexiteers in her party that might vote against the deal in Parliament. Two remainers, Anna Soubry and Sarah Wollaston, continue their push for a second referendum. Soubry calls it a "bad deal and not what anyone voted for in 2016.”

In a BBC interview, Wollaston is more conciliatory, saying the deal is the "best" the prime minister could get, but that it should be put to a public vote with Remain as the alternative.

The View From Germany

Manfred Weber, an ally of Chancellor Angela Merkel, is looking on from the outside. "The ball is now in London’s court -- and it depends on how the U.K. responds to this. You have to understand that a certain amount of sobriety has emerged in the U.K. in the past few weeks on the empty promises made by the Brexiteers, which they can’t keep,” he told reporters in Berlin. “This sobriety can be seen."

Spain, EU Discuss Gibraltar Tweaks (12:25 p.m.)

Spanish officials are working with the EU on Monday to try to fix the wording on Gibraltar, according to a Foreign Ministry official. Spain doesn’t like the wording about the future relationship between the EU and the U.K. as it could be interpreted as including Gibraltar. Spain wants it to be clearer.

"We want to make sure the interpretation of this text is clear and shows that what’s being negotiated between the EU and the U.K. does not apply to Gibraltar," Foreign Minister Josep Borrell told reporters.

How Serious is Spain? (12:05 a.m.)

Gibraltar is once again back as a sticking point in talks. It’s been a Spanish tactic throughout the past two years that every time there’s a decisive moment, Spain has brought up Gibraltar, Ian Wishart writes.

So far, they’ve always managed to find a way to get around it and come up with new language.

Gibraltar aside, Spain has been pretty conciliatory throughout the process, and is one of the countries with most to lose from a no-deal scenario. A separate agreement on the territory was sorted out without much fanfare before the wider withdrawal deal was agreed.

The EU gave Spain assurances before the negotiations started that no deal between the EU and U.K. after Brexit would apply to Gibraltar unless there was a separate agreement with Spain. Now, Spain wants wording somewhere in the draft treaty that reflects that.

No Date For Parliamentary Vote (11:55 a.m.)

The government hasn’t set a date yet for Parliament to vote on the Brexit deal. However, a U.K. official said it would be logical to get it done before an EU summit scheduled for Dec. 13-14.

Gibraltar is Back as a Sticking Point (11:40 a.m.)

Spain has requested changes to Art. 184 of the draft Withdrawal Treaty, even though Michel Barnier said that the text shouldn’t be reopened, according to a person familiar with the situation. Its foreign minister said that Spain’s support for the exit deal is contingent on the content of the political declaration on the future ties between the two sides, according to the person, who asked not to be named as the discussion wasn’t public.

Spain insisted that Gibraltar isn’t part of the U.K., and therefore any future agreement can’t apply to its territory. It also sai ni d said that applying a possible extension to the transition period to Gibraltar can’t be automatic and should have its prior agreement.

A Transition Must End by the Next Election (11:20 a.m.)

May’s spokesman said any extension of the transition period must come to an end before the next election, which is scheduled for June 2022. The EU is proposing end-2022 as a maximum cut-off date. So it sounds like the positions aren’t too far apart.

The extension to the transition is included in the divorce deal as a way of potentially avoiding having to invoke the Irish backstop -- the most politically toxic part of the settlement.

"I am Determined," Says May (11:30 a.m.)

May ends her speech to the CBI with a fighting message to her internal opponents. "I am determined to deliver it," she says of her Brexit deal, with a heavy emphasis on "I".

"My job is to get the best deal and parliament must then examine it and do what is in the national interest," she says.

May’s Message to Manufacturers, and MPs (11:25 a.m.)

May tells manufacturers she understands their concerns. She name-checks automakers including Nissan, Honda, Vauxhall and Jaguar Land Rover.

“Ensuring we have free-flowing borders is crucial: skilled jobs rely on it,” she says. “These firms support tens of thousands of jobs both directly and indirectly. All rely on parts that flow across borders to support just-in-time supply chains.”

It’s also a message to lawmakers who might reject her deal. Jobs in their constituencies are at stake.

This is People’s Lives (11:20 a.m.)

May issues a direct challenge to her opponents in the Conservative Party: "We’re not talking about political theory, but the reality of people’s lives and livelihoods," she says. The deal she’s agreed will help to keep jobs and growth in the UK, she tells delegates at the CBI conference.

Brexit Is Consuming the U.K., Says CBI Chief (11:07 a.m.)

Ahead of May’s speech to the Confederation of British Industry, its director general, Carolyn Fairbairn, offered her frustrated take on the situation. Companies are spending “hundreds of millions of pounds” on preparing for the worst case, diverting resources from investment and job creation, she says. May’s Brexit agreement isn’t perfect, but it’s “hard-won progress.”

“While other countries are forging a competitive future, Westminster seems to be living in its own narrow world, in which extreme positions are being allowed to dominate.”

Barnier Borrows ‘Take Back Control’ Mantra (11 a.m.)

Michel Barnier, the EU’s chief Brexit negotiator, attempted to show the rebel lawmakers in the U.K. who want to get a better deal that they have nothing to worry about. He used one of their favorite phrases to explain they had got what they wanted.

“The EU and the U.K. will have full control over their legislation and rule-making,” he told reporters in Brussels after a meeting with representatives of the 27 remaining EU governments. “This is essential on our side for the integrity of the single market; it’s essential for the U.K. in terms of taking back control.”

And he warned that now was not the time to change the agreement that has been negotiated. “Now more than ever we must all remain calm -- and I will remain calm -- and keep our focus on the need for the U.K. to leave the EU in an orderly fashion,” he said.

Get Behind the PM, Foreign Office Minister Urges (10:30 a.m.)

Alan Duncan urged his fellow Conservative lawmakers to back May. Speaking in Brussels he said: “My message to my parliamentary colleagues back in London is back the PM 100 percent but be realistic and accept that what we need is a deal here which can last for the future and telling the prime minister what to do all the time is not going to make anything better.’’

Davis Says May is Heading for Big Defeat on Deal (9:29 a.m.)

Former Brexit Secretary David Davis says he has not submitted a letter calling for a no-confidence vote in May but he believes the number of Tory MPs who have is now over 40 -- close to the 48 needed to trigger a vote. However, he admitted the only lawmaker who actually knows is the chairman of the 1922 Committee of rank-and-file Tory lawmakers, Graham Brady.

Speaking in a Bloomberg Television interview, Davis, who resigned from the Cabinet in July in protest at May’s Brexit proposals, predicted the prime minister will lose “by a large number of votes” when the agreement negotiated with the European Union is put to Parliament. He said the deal on offer is worse than staying in the EU in some ways and urged May to bring forward the vote so that lawmakers could express their opinions. “If it’s this deal or no deal, then I would rather no-deal,’’ he said.

Asked if May would lose a vote of confidence, Davis replied: “It’s really hard to tell. The argument here is not about Theresa, it’s about Theresa’s policies.’’

Longer Transition Period May Be a Good Idea (8:57 a.m.)

Business Secretary Greg Clark said he’s open to extending the transition period by as long as two years – until December 2022 -- if that’s what’s needed to complete a deal on the future relationship and avoid companies having to make two sets of changes to trading rules.

“It would be at our request and that would be a maximum period,’’ Clark told BBC Radio’s Today program Monday. “There is value in having an option, rather than going in for a temporary period into the backstop and having a second change, to have the option if we want it, if the U.K. wants it, to extend the transition period.”

Clark said the withdrawal deal isn’t likely to change in “any substantial sense” now, but that there’s scope for change in the overall package: “There was always the intention that a future partnership would be fleshed out in some more detail,” he said.

Former EU President Says No Room on Brexit Deal (8.29 a.m.)

“There is almost no room for renegotiation of the deal,” Herman Van Rompuy tells Today show. “The deal is as it is. I would not say take it or leave it, but it is close to that reality. On the main parameters there will be no room for maneuver.”

Van Rompuy says extending the post-Brexit transition period would provide the “leeway needed” to reach a free-trade agreement. “In decades to come no one will ask if we negotiated one year longer than forecast.” The ball is now in Britain’s court, he said.

May Gets Reminder of Threat of Leadership Challenge

Meanwhile, earlier on the same program, there was a reminder for May about the peril she faces from pro-Brexit lawmakers in her own Conservative Party who hate her withdrawal agreement and are trying to oust her by forcing a no-confidence vote. Forty-eight need to write letters in order to trigger a vote, and so far more than 20 have publicly declared that they’ve done so –- though The Sun says the real number is 42. One of those who’ve gone public, Simon Clarke, was on BBC Radio this morning urging colleagues to join the revolt.

“Colleagues who have said that they will act now need to search their consciences and follow up on what they’ve pledged to do,’’ Clarke said. “This day must be the point at which action is taken because we now have the deal on the table. It’s gone from theory to reality, and our worst fears have been realized.’’

Lib Dems Optimistic Britain Will Get Second Referendum

The Liberal Democrats, who have long pushed for a second referendum on Britain’s EU membership, are increasingly optimistic they may get one. Party Leader Vince Cable put the chances at 50:50 in a BBC radio interview. He noted that May has in recent days, on several occasions, said that no Brexit at all is a possible consequence of lawmakers rejecting the deal she has secured.

“She now recognizes that this is something that has progressed from the possible to the probable,’’ he said. There are signs of public support too: A Populus poll for Best for Britain (which wants a second referendum) found on Sunday that if undecided voters are discounted, 59 percent of Britons are in favor of a second referendum.


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