May Warns of No-Deal Brexit Dangers With Key Vote Weeks Away

(Bloomberg) -- Prime Minister Theresa May, who has just 28 days to convince rebellious lawmakers to back her Brexit deal, put the U.K. on high alert over the dangers of crashing out of the European Union without an agreement.

Her Cabinet ministers agreed Tuesday to implement “in full” plans for a no-deal break from the European Union, including 3,500 troops put on standby and 2 billion pounds ($2.5 billion) of funds made available for contingencies. Further warnings to voters and businesses will follow in coming weeks.

May has said she’ll put the terms she negotiated with Brussels to a vote in Parliament the week of Jan. 14, by which time her advisers hope enough lawmakers will have seen the danger of a no-deal split to back it. Authorities predict massive economic damage from leaving the EU without an agreement, including a 25 percent slump in the pound and house prices down 30 percent.

The Treasury allocated the biggest share of no-deal funding -- 480 million pounds -- to the Home Office for bolstering the Border Force and security. The Department for Environment Food and Rural Affairs was allocated 410 million pounds for ensuring fish trade isn’t disrupted in case of no deal. Her Majesty’s Revenue and Customs was given funds to employ 3,000 people in customer services and compliance, while the Department for Business and Industrial Strategy will use its share to ensure stability in company law and audits.

No Sweeteners

“I’ve worked with departments so they have the resources to prepare as we leave the European Union, including our borders, trade policies and support for businesses,” Chancellor of the Exchequer Philip Hammond said, according to a statement. “But a responsible government prepares for all contingencies and that is why we’re stepping up no deal planning.”

May was rebuffed when she tried to persuade EU leaders to sweeten the Brexit deal, after she pulled a planned parliamentary vote in the face of anger in her own Conservative party over arrangements for the post-Brexit Irish border. She will keep talking to the EU, but now wants members of Parliament to be staring over the cliff edge when they vote.

As has been the case throughout the Brexit process, the prime minister’s attempt to present a united front unraveled within minutes. Her spokesman was still briefing reporters about the Cabinet meeting when details of divisions started to leak out.

‘Managed Glidepath’

International Development Secretary Penny Mordaunt used the meeting to press her case for the government to embrace a no-deal outcome, and called for negotiations on a two-year “managed glidepath” out of the bloc, according to a person familiar with the discussions.

That idea was slapped down by Justice Secretary David Gauke, who said a so-called managed no-deal Brexit is not on offer from the EU. Cabinet’s job is “not to propagate unicorns but to slay them,” he told colleagues, according to another official speaking on condition of anonymity.

Work and Pensions Secretary Amber Rudd urged the Cabinet to consider the job losses that would result from a no-deal Brexit. Britain’s future would only be bright if it leaves with an agreement and urged ministers to put politics aside to build a consensus. While she did back stepping up contingency planning, she said it shouldn’t become a self-fulfilling prophecy.

‘Seat Belt’

“Just because you put a seat belt on doesn’t mean you should crash the car,” Rudd said, according to another person familiar with the discussions.

Scottish Secretary David Mundell expressed his strong opposition to a second Brexit referendum, saying it would raise serious democratic issues at a time when the Scottish National Party is pushing for another ballot on independence.

Meanwhile in the House of Commons, opposition parties who want closer ties to European markets than May’s deal will provide, accused the prime minister of “playing games” to win support from members of Parliament.

“This announcement is simply an attempt to scaremonger MPs, businesses, and the British public into supporting the prime minister’s deal,” Jamie Stone, armed forces spokesman for the pro-EU Liberal Democrats, said after the announcement of troops being put on standby. “The government must stop playing games with our future and diverting public resources to solve an outcome they are able to prevent.”

Still, there was a rare respite for May as opposition parties laid bare their differences on the best way to challenge her in Parliament.

Labour leader Jeremy Corbyn’s decision this week to seek a motion of no confidence in May -- which has no chance of triggering a general election, as opposed to a motion of no confidence in her government, which does -- was taunted by his own lawmakers and Ian Blackford, Westminster leader of the Scottish National Party.

Corbyn “has become the midwife for Brexit” and is “letting the government off the hook,” Blackford said. “I am asking him to do what he spectacularly failed to do yesterday and bring forward a motion of no confidence in the government.”

--With assistance from Alex Morales and Robert Hutton.

To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net;Kitty Donaldson in London at kdonaldson1@bloomberg.net;Jessica Shankleman in London at jshankleman@bloomberg.net

To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Andrew Langley

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