Theresa May Weighs Move to Restrict No-Deal Brexit Threat

(Bloomberg) -- Prime Minister Theresa May will make a call Tuesday that could water down her threat to crash Britain out of the European Union without a deal, according to a person familiar with her thinking. 

May, whose cabinet is due to meet in the morning, is said to be weighing whether to accept a plan drafted by pro-EU politicians who want to make it harder to leave the bloc without a divorce agreement.

The proposal in question -- an amendment to the Finance Bill -- is intended to limit the Treasury’s tax raising powers if there’s a no-deal split. 

May’s advisers will wait until they know if the proposal has been selected for a vote in Parliament on Tuesday before announcing if they will back it or oppose it. That the premier’s team is even thinking of accepting the proposed change to her key budget legislation is a sign of how weak her position is as she battles to steer Britain out of the EU. 

Facing Defeat

Next week May will put her Brexit deal to a crucial vote in Parliament, and it is facing defeat as Euroskeptics in her Conservative Party as well as the Democratic Unionist Party, which props up her minority administration, have said they will vote against it.

If Parliament rejects May’s deal in the vote next week, she says the country could be forced out of the EU with no agreement in place. On Sunday, May restated her position that no deal is better than a bad deal and has stepped up contingency planning in case negotiators fail to reach an accord in time for exit day on March 29. 

“Some argue that they need the imminent threat of no deal to persuade people to back the prime minister’s withdrawal agreement,” Labour lawmaker Yvette Cooper, who proposed the amendment, wrote in an article for Tuesday’s Guardian newspaper. “The country can’t afford to play Brexit chicken and wait to see who blinks first. We need to ensure that parliament has the powers to prevent no deal if it reaches that point.”

Officials in the Treasury are said to be relaxed about the impact of the proposed change, which would mean government could only vary taxation rules through an executive order if Parliament backs an agreed deal, postpones the divorce by requesting an extension to the negotiating period, or a majority of MPs vote for a no-deal split.

But the premier’s opponents will seize on the political significance of another climbdown on her Brexit strategy in the face of Parliamentary opposition.

The change proposed by Cooper is backed by Tories including Nicky Morgan, Nick Boles and Oliver Letwin and Labour will instruct its MPs to support it if it is chosen for consideration by the Speaker. Boles said it would be the first of many.

“This amendment will not on its own prevent a ‘no deal’ Brexit, but it gives the House of Commons an opportunity to express its views about the possibility of leaving the EU without a deal,” Boles said. “We will be looking to bring forward similar amendments to other bills until the Government accepts the will of the majority of MPs and categorically rules out leaving the EU with no deal.”

May’s office denied reports in Tuesday’s Daily Telegraph that British diplomats have sounded out their EU counterparts about extending the two-year divorce process under Article 50 of the Lisbon Treaty, which is scheduled to come to an end on March 29.

May said Sunday that extending the Article 50 process would add to uncertainty and shy away from delivering on the result of the 2016 Brexit referendum. “We’re already nearly three years from the vote to the leave the European Union,” the prime minister told BBC TV. “I think we should be leaving the European Union and delivering on that vote.”

To contact the reporters on this story: Jessica Shankleman in London at jshankleman@bloomberg.net;Robert Hutton in London at rhutton1@bloomberg.net

To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Thomas Penny, Robert Jameson

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