U.K. Sees Room for Maneuver on Brexit After Merkel, Macron Talks

(Bloomberg) --

The U.K. government sees an opportunity to restart Brexit negotiations with the European Union after Prime Minister Boris Johnson’s meetings last week with German Chancellor Angela Merkel and French President Emmanuel Macron.

The two leaders appeared to relax their language on the Brexit withdrawal agreement and the need to retain the so-called backstop provision for the Irish border, a U.K. official said on condition of anonymity. Johnson has demanded the EU drop the backstop, a fallback mechanism that is meant to keep the frontier free of checks after Brexit but which is despised by Brexiteers who argue it will keep the U.K. tied to the bloc.

Alarmed by the prospect of the U.K. crashing out of the bloc without an agreement if talks with the EU fail, the leaders of U.K. opposition parties seeking to block a no-deal split held a closed-doors meeting, convened by Labour’s Jeremy Corbyn, to discuss what they’ll do when Parliament returns next week.

Parliament Challenge

Earlier this month, Labour proposed they should call a vote of no-confidence in Johnson’s government, with a view to installing Corbyn as a caretaker prime minister mandated to delay Brexit and call an election. That idea was rejected by both rebel Conservatives and some on the opposition benches. Instead, the statements after Tuesday’s meeting focused on finding legislative routes to stopping a no-deal Brexit.

That sets up the prospect of a fight in the House of Commons after Parliament returns from its summer recess next week.

The pound extended gains, with investors citing a warmer tone from Brussels and plans to coordinate opposition to a no-deal split as reasons for the rally.

Both Merkel and Macron seemed willing to engage in talks on Johnson’s concerns and suggestions for alternative technology-based solutions, including trusted trader programs, the U.K. official said. That could pave the way for the EU to agree to reopen the deal negotiated by Johnson’s predecessor, the official said.

Standing Firm

Johnson has repeatedly said he wants a new deal but has also been clear that he’ll take the U.K. out of the EU regardless on Oct. 31. Following talks in Berlin and Paris last week, and with European Council President Donald Tusk on the sidelines of the Group of Seven summit in France over the weekend, the focus is on trying to create space for negotiations, the official said.

On Tuesday afternoon, Johnson spoke by phone to outgoing EU Commission President Jean=Claude Juncker to press his position. Juncker’s office said afterwards that he had repeated his “willingness to work constructively” with the prime minister “and to look at any concrete proposals he may have” -- as long as they were compatible with what had already been agreed. He also said that while the EU is “fully prepared” for a no-deal Brexit, it would do everything possible to avoid one. “A no-deal scenario will only ever be the U.K.’s decision, not the EU’s,” Juncker’s office said.

Next month Johnson is due to visit Irish Prime Minister Leo Varadkar in Dublin. That trip will be crucial to any compromise with the EU over the backstop, which the EU regards as necessary to both protect its single market and ensure the peace process in Northern Ireland isn’t jeopardized by Brexit. Following a call with Johnson on Tuesday, Dutch Prime Minister Mark Rutte said on Twitter the EU is open to any “concrete proposals” from the U.K. as long as they’re consistent with those aims.

Read More: Pound Gains on Warmer Tone From EU, Plans to Block No-Deal

But even if Johnson is successful in removing the backstop from the deal, he still faces a fight at home from both sides of the Brexit argument.

Labour’s Corbyn wrote to 116 Tory MPs, including former Prime Minister Theresa May and former Chancellor of the Exchequer Philip Hammond, seeking their support to find a “practical way to prevent” a no-deal Brexit following his meeting with other opposition party leaders on Tuesday.

“Prime ministers come and go but we’ve never seen one like this who has the potential to threaten the very nature of our democracy,” Labour’s economy spokesman John McDonnell said in a speech in London. “We will not stand aside and let that happen. We will use whatever mechanism necessary.”

Meanwhile, Nigel Farage said his Brexit Party has now selected candidates for every parliamentary constituency and is ready to fight a general election. “Can you trust Boris Johnson on this issue?” he asked the audience at a party event in central London. “No!” they chorused. “Can you trust the Conservative Party on this issue?” “No!” they replied.

Farage called the withdrawal agreement as negotiated by May “a betrayal” of the 2016 referendum result, and warned that if Johnson tries to push it through, the Brexit Party would run against his Conservative Party in every constituency. While they might struggle to win many seats, they could take enough votes away from the Tories to seriously damage them. Farage said his message to Johnson is “deliver or politically die.”

--With assistance from Charlotte Ryan and Thomas Penny.

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: Robert Hutton at rhutton1@bloomberg.net, Stuart Biggs, Mark Williams

©2019 Bloomberg L.P.