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EU Calls for Long Delay as Labour Talks Pause: Brexit Update

U.K. government says talks with Labour were “productive” and will resume on Thursday after summit.

EU Calls for Long Delay as Labour Talks Pause: Brexit Update
A demonstrator waves a European Union (EU) flag and a Union flag, also known as a Union Jack, during an anti-Brexit demonstration outside Parliament in London, U.K. (Photographer: Simon Dawson/Bloomberg)

(Bloomberg) --

Britain looks headed for a long delay of Brexit day in a blow for Prime Minister Theresa May, as EU Council President Donald Tusk said the short extension she’s after won’t be enough to break the deadlock. Talks with Labour paused, with the opposition party saying the government isn’t moving enough.

Key Developments:

  • Tusk calls for extension of up to a year with an early exit option
  • France says U.K. mustn’t be able to influence important EU decisions during extension
  • The risk for May is how a long extension is received back home
  • U.K. government says talks with Labour were "productive" and will resume on Thursday after summit; Labour says more movement needed

Tusk Calls For Extension of a Year (6 p.m.)

EU Council President Donald Tusk said May’s proposed extension to June 30 wouldn’t be long enough as there’s no reason to believe a deal can get through Parliament in time.

Adding weight to his argument, the Labour Party put out a statement on Tuesday evening that struck a much less positive tone that the one the government just published on cross-party talks. The opposition said more movement was needed to find a compromise.

Tusk called for a delay of up to a year, with an early exit option, to avoid "the risk of a rolling series of short extensions and emergency summits, creating new cliff-edge dates."

A draft of the summit conclusions also allows for an early exit if a deal is ratified. No date has been set by EU officials said earlier that Dec. 2019 or March 2020 were most likely.


Parliament Endorses May’s Bid for June 30 Extension (5:30 p.m.)

The U.K. Parliament overwhelmingly backed May’s move to seek an extension of EU membership to June 30 to avoid a no-deal scenario.

The result was 420-110. The trouble is, the EU looks set to propose a longer delay, and that might be difficult for May to sell when she comes home.

She’s just gone into talks with French President Emmanuel Macron in Paris.


Talks With Labour ’Productive,’ Government Says (5 p.m.)

Talks with Labour aimed at finding a consensus approach to Brexit were "productive and wide-ranging." Discussions will resume on Thursday after the EU summit.

Both sides are "working hard to agreeing a way forward," a spokesman said in a statement, and the aim is to get a deal done soon enough to avoid having to take part in European elections on May 23.

It means May has nothing firm to show EU leaders at the summit, but at least she can argue that talks are going in the right direction. According to a person familiar with the situation, May is ready to rub out some of her red lines and the talks are moving toward a customs union -- an outcome the EU would welcome.

May to Meet EU’s Tusk Before Summit (4:30 p.m.)

Theresa May will hold talks with EU Council President Donald Tusk immediately before the summit on Wednesday, her spokesman James Slack told reporters. He said the government wants to secure the shortest possible Brexit extension.

Meanwhile government negotiations with the Labour Party will go on for as long as there’s serious engagement, the talks are constructive and there’s a chance of agreement, Slack said.

Hammond: Many Firms Unprepared for No-Deal (4:15 p.m.)

Chancellor of the Exchequer Philip Hammond on Tuesday risked inflaming tensions with business by accusing them of failing to prepare for the possibility of a no-deal departure from the EU.

While large manufacturers have been building buffer stocks of imported components, “there are still far too many businesses who have adopted the famous approach of the ostrich in the sand in relation to this eventuality,’’ he said in Parliament when asked if firms were ready for a no-deal Brexit.

Varadkar: France Concerned About Disruption (4:10 p.m.)

There’s no suggestion French President Emmanuel Macron will veto an extension of the Brexit process, Irish Prime Minister Leo Varadkar said in parliament in Dublin, though he is concerned about U.K. causing disruption.

Varadkar said Ireland is open to a longer extension, though it doesn’t want to offer that to Theresa May if she doesn’t want it -- as doing so risks forcing the U.K. into a no-deal scenario.

Merkel Sees Extension With Early Exit Possible (4 p.m.)

German Chancellor Angela Merkel told lawmakers the U.K. could get an extension that includes the option of leaving earlier if a deal is reached. She called it a "flextension," according to two people at the meeting.

She didn’t mention a specific end-date, which EU officials said earlier would probably be end-2019 or early 2020.

France Seeks to Clip U.K. Rights During Extension (3:30 p.m.)

France wants to make sure the U.K., as an “intermediate member state,” can no longer take part in major, long-term decisions of the bloc, according to an official in President Emmanuel Macron’s office.

“When you are a leaving member state, you are not a state member that can have a say in the important things,” the official told reporters, citing the EU budget as an example.

France will be vigilant as to what guarantees are attached to the extension; the longer the extension the stronger the guarantees provided by the U.K. must be, the official said.

The U.K. has pledged that it won’t be disruptive, but the EU is worried that a successor to May, particularly a hardline Brexit-backer, could seek to subvert EU business to get his way in divorce talks.

Core EU Leaders to Meet Before Summit (2:30 p.m.)

Leaders from Britain’s closest EU neighbors will meet before the full summit in Brussels on Wednesday.

Belgium invited the leaders from the countries that border the North Sea to attend at 3:30 p.m. It’s a billed as a coordination meeting on the Brexit fallout.

Hancock: Tories Need to Move Beyond Brexit (1:45 p.m.)

The ruling Conservatives need to get Brexit behind them so the party can discuss other topics and “get back on the front foot,” Health Secretary Matt Hancock said at the launch of a report by the Tory think tank Onward, which shows the party struggling to win over young voters.

“I’d like to change the subject,” Hancock said when asked what policy he’d change if he led the party. “We need to talk about everything else, not just Brexit. It’s by changing the subject that we can really address people’s concern.”

The panel also included International Development Secretary Penny Mordaunt and influential rank-and-file Tory Tom Tugendhat. All three politicians are touted as candidates to succeed Theresa May, and jokes about leadership bids abounded -- with none of them denying they’re considering standing.

May Is Said to Relax Red Lines in Labour Talks (1:30 p.m.)

Theresa May is relaxing her red lines in talks with the opposition Labour Party aimed at finding a cross-party resolution to the impasse over Brexit, a person familiar with the matter said.

Compromise on a customs union is where the talks are heading, but the government just can’t call it that, according to the official, who asked not to be named discussing private negotiations.

The comments gel with remarks by Justice Secretary David Gauke earlier (see 7:30 a.m.) that there’s “common ground” with Labour on what the U.K.’s post-Brexit trading relationship with the EU should look like.

Parliament to Vote on Brexit Delay (1:45 p.m.)

Members of Parliament will vote later Tuesday on how long a delay May should ask the EU for -- that’s the result the law that was passed last night. While the EU controls the length of extension, it’s still likely that simply getting the bill into legislation has had an impact on the tone of Brexit discussions, forcing the government to accept that Parliament won’t accept a no-deal outcome.

Tuesday’s motion, tabled by the government, suggests the U.K. should seek an extension only until June 30. It is amendable, and a pro-Brexit Tory has proposed that the U.K. should leave next week, and the Scottish National Party argues the U.K. should stay at least until June 30. With many MPs absent, the votes could be tight.

May, Merkel Agreed on Need for Orderly Brexit (1:40 p.m.)

Theresa May met German Chancellor Angela Merkel for a working lunch, with both leaders agreeing on the importance of an “orderly” Brexit, the prime minister’s office said in an emailed statement.

The leader discussed the U.K.’s request for a Brexit extension to June 30, with the option to leave the bloc if the Withdrawal Agreement is ratified before that, according to the statement. May also updated Merkel on the progress of government talks with the opposition Labour Party, it said.

Labour: Any Deal With Government Must Be Locked In (1:10 p.m.)

In talks with the government Tuesday, Labour will be seeking assurances that any deal can’t be reneged on by a future administration, the party’s Treasury spokesman John McDonnell told reporters, pointing out that Tories including potential leadership candidate Boris Johnson and Brexiteer Jacob Rees-Mogg have suggested a customs union could be overturned, he said.

“Some of that discussion that will take place will be about how any deal will be secured for the long term, how best to secure that though either domestic legislation or treaty,” McDonnell said, adding that workers’ rights and environmental protections will be a major focus of today’s talks.

Chancellor of the Exchequer Philip Hammond will attend the talks Tuesday to set out government proposals on alignment with the EU’s single market, McDonnell said. A confirmatory vote on the Brexit deal will also be on the agenda, though the talks may not reach that point, he said.

McDonnell reiterated that the government hasn’t yet changed any of its language around a customs union, but said he hoped for movement today. Tuesday’s round of talks is due to finish at 5:30 p.m., he said.

EU Officials Predict Long Extension (12:25 p.m.)

The European Union is likely to offer the U.K. a Brexit delay until the end of 2019 at the earliest, according to EU officials, with conditions attached to ensure good behavior during the extension.

Many EU chiefs now think a long delay to Brexit is necessary to avoid the bloc being held hostage to internal wrangling in Theresa May’s Conservative Party, according to three EU officials, who spoke on condition of anonymity after a meeting of the bloc’s 27 remaining governments in Luxembourg on Tuesday.

Slack: Both Sides Need Brexit Certainty (12:05 p.m.)

After a flurry of calls to European leaders yesterday to set out why the U.K. is seeking a short Brexit extension, Theresa May spoke to Swedish Prime Minister Stefan Lofven before flying to Berlin to meet Merkel for talks, her spokesman, James Slack, told reporters.

“The U.K. needs certainty, but the EU needs certainty too,” he said when asked if an extension could last even longer than June 30.

Slack was also asked about comments on Twitter from Conservative euroskeptic lawmaker Jacob Rees-Mogg calling on the U.K. to “be as difficult as possible” if it remains in the EU for longer than expected. Slack said the government has “engaged constructively” and will continue to do so.

Hammond, Lidington, Barclay, Gove in Labour Talks (12 p.m.)

Attending the government-Labour talks at the Cabinet office this afternoon will be Chancellor of the Exchequer Philip Hammond, May’s de facto deputy David Lidington, Brexit Secretary Stephen Barclay and Environment Secretary Michael Gove, May’s spokesman James Slack told reporters.

Both the economy and environmental concerns will be on the agenda, though Slack declined to comment on whether a second Brexit referendum would also be discussed -- and he wouldn’t predict when negotiations will wrap up.

Brexit spokesman Keir Starmer, business spokeswoman Rebecca Long-Bailey, environment spokeswoman Sue Hayman and treasury spokesman John McDonnell will attend for Labour, a party spokeswoman confirmed.

May-Merkel Choreography Goes Awry in Berlin (11:20 a.m.)

After briefly getting stuck in her car on her last Berlin visit, Theresa May had another mishap on Tuesday when she arrived at the chancellery.

EU Calls for Long Delay as Labour Talks Pause: Brexit Update

She was three minutes early, which meant German Chancellor Angela Merkel was not yet outside to greet her. A weary-looking May walked into the building, and the two leaders then emerged to have their photographs taken. “Nice to see you again,” Merkel said in English, adding, “the weather looks beautiful.”

Italy Seeks to Avoid No-Deal Brexit at All Costs (11:10 a.m.)

Italy’s populist government wants to prevent a no-deal Brexit at all costs, according to an official who asked not to be named discussing confidential talks. The official said a no-deal Brexit would be a disaster for the U.K. and negative for European Union member states.

Italian backing for a possible Brexit extension depends on what the objectives are, and the impact on negotiating time for the transition phase, the official said. If an extension is longer than four months, governments need to consider what that means for the transition period, he added.

On a lighter note, the official cited an Italian expression to sum up the British struggle with Brexit. If you don’t manage to mix the ingredients for a mayonnaise properly, then the mayonnaise “goes crazy.”

U.K. Said to Be Heading for Long Extension (11 a.m.)

Three EU officials, who spoke on condition of anonymity, said the U.K. is heading for a long extension after no member state argued to veto a Brexit delay.

At the meeting of national European affairs ministers in Luxembourg, a small number of member states argued for an extension to June 30, but most argued for much longer: to December 2019, or even March 2020, according to the officials. The discussion is focused on which date will put most pressure on the House of Commons to ratify the Brexit deal, they said.

Talks continue among EU ambassadors in Brussels tonight to nail down the extension date.

Barnier: Brexit Delay Must Have Clear Aim (10:20 a.m.)

Speaking in Luxembourg, the EU’s chief negotiator Michel Barnier said any extension to Brexit must have a clear aim, adding that the U.K. can still revoke Article 50 -- i.e. canceling Brexit altogether -- to prevent a no-deal departure from the bloc.

EU Calls for Long Delay as Labour Talks Pause: Brexit Update

He also said the EU can change the political declaration on future ties within hours, including to add a customs union if needed, adding that he hoped talks between the government and the opposition Labour Party aimed at finding a consensus on Brexit have a positive outcome.

He reiterated, though, that the Withdrawal Agreement itself cannot be reopened -- that’s the part of the divorce deal that contains the Irish backstop which has Brexiteers in the U.K. so riled (see 9:30 a.m.). The EU is prepared for any outcome, he said.

Germany Denies Merkel Backstop Concession (10:10 a.m.)

Cabinet Minister Andrea Leadsom’s comment (see 9:30 a.m.) calling on German Chancellor Angela Merkel to renegotiate the contentious Irish backstop -- and subsequent speculation on Twitter that Merkel was willing to put a five-year limit on the measure -- drove a brief rally in the pound.

But a German government spokesman moved quickly to deny speculation that Merkel would accept a backstop limit.

It’s worth reiterating that Leadsom’s comments contradict the U.K. government’s own policy, as May herself has said the Withdrawal Agreement can’t be re-opened. The 27 other European leaders have made any extension sought by the British conditional on leaving the Withdrawal Agreement as it is.

And the EU’s chief negotiator Michel Barnier reiterated on Tuesday that the divorce deal will not be reopened.

May Requested Merkel Meeting, CDU Lawmaker Says (10 a.m.)

Theresa May requested Tuesday’s meeting with German Chancellor Angela Merkel in Berlin, according to Michael Grosse-Broemer, the parliamentary whip of Merkel’s CDU party.

“The British prime minister has asked for this talk, because she knows the German chancellor is a heavyweight in Europe,” Grosse-Broemer told reporters.

The German government declined to say on Monday who had asked for the meeting.

Leadsom Calls on Merkel to Resolve Backstop (9:30 a.m.)

Pro-Brexit Cabinet member Andrea Leadsom called on German Chancellor Angela Merkel to re-open the EU Withdrawal Agreement in order to solve the issue of the backstop, despite repeated EU assertions that it won’t happen.

“What I think would be fantastic is if Angela Merkel will try to support a proper U.K. Brexit by agreeing to reopen the Withdrawal Agreement,” Leadsom told Sky News on Tuesday. “There have been rumors over the weekend that some senior members of the German government would be willing to do that to get Theresa May’s deal over the line.”

Leadsom’s comments contradict U.K. policy, as May herself has said the Withdrawal Agreement can’t be re-opened. The 27 other European leaders have also made any Brexit extension sought by the British government conditional on leaving the Withdrawal Agreement as it is.

By announcing she will quit once her Brexit deal is through Parliament, May has started the race to find her successor. That means potential candidates are trying to sound appealing to the largely euroskeptic Tory Party membership.

McDonnell: Referendum Still Up for Discussion (9:20 a.m.)

Sky News interviewed Labour’s Treasury spokesman John McDonnell on his way to work this morning. Despite Justice Secretary David Gauke’s remarks (see 8:25 a.m.) on a second referendum, McDonnell -- who is joining the cross-party talks today -- said he expects a so-called people’s vote or confirmatory referendum on the Brexit deal to be part of the discussions.

Chancellor of the Exchequer Philip Hammond will also join the talks today.

Gauke: May Opposes People’s Vote on Deal (8:25 a.m.)

Justice Secretary David Gauke repeated during his media round this morning that members of Parliament will have an opportunity to amend the Withdrawal Agreement Bill to legislate for a second referendum.

It’s a clear indication that as the Conservatives and Labour go into further talks today, May is unwilling to compromise in favor of a confirmatory vote on the Brexit deal -- an idea opposed by the majority of Tories but which has backing from some Labour MPs and especially the party membership.

The prime minister has made clear she doesn’t want another referendum, Gauke said on BBC Radio 4.

May Must Bring Clarity, Says France (8 a.m.)

French Finance Minister Bruno Le Maire said May must present “credible” reasons for extending the departure when she comes to visit President Emmanuel Macron in Paris on Tuesday.

“I prefer a deal, but May must give reasons for an extension and those reasons must be credible,” he told France Info radio. May must “bring to the President, and to the French people, clear explanations if asking for an extension.”

A long delay could bring a “grotesque situation in which a state that wants to leave the EU holds the May EU elections. You can see the surreal aspect of this decision.” May agrees and is trying to get out so the U.K. doesn’t have to take part.

Justice Secretary Sees Common Ground (7:30 a.m.)

U.K. Cabinet minister David Gauke, a Remainer, said there is common ground between the government and Labour on what it wants the post-Brexit trading relationship with the EU to look like.

“There are differences between the parties, and we need to see if we can resolve those differences,” he told the BBC.

“There is common ground in terms of with our trading relationship with the European Union -- we don’t want tariffs, we don’t want to have quotas, we don’t want to have rules of origin requirements. Now I think both parties agree with that so that is an area where there is common ground.”

What he has described sounds a lot like a customs union. Labour complained on Monday that a customs union still wasn’t on the table and the government’s official line is that it still wants an independent trade policy, which a customs union wouldn’t allow.

Earlier:

--With assistance from Helene Fouquet, Neil Callanan, John Follain, Arne Delfs, Iain Rogers, Robert Hutton, Kitty Donaldson, Ian Wishart, Marine Strauss, Dara Doyle and Andrew Atkinson.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net;Robert Hutton in London at rhutton1@bloomberg.net;Jessica Shankleman in London at jshankleman@bloomberg.net;Ian Wishart in Brussels at iwishart@bloomberg.net

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

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