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May Loses a Minister as Brexit Progress Hits Snags at Home

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(Bloomberg) -- Prime Minister Theresa May’s hopes of getting any Brexit deal through Parliament were dealt a blow from an unexpected corner on Friday as a pro-European minister quit.

Negotiations in Brussels made some progress on key issues, but developments at home underscored the bigger challenge facing May: how to get the deal she’s trying to clinch through an increasingly hostile Parliament.

Jo Johnson, the pro-European brother of arch-Brexiteer Boris quit his role as transport minister, and said he couldn’t vote for the accord that May is negotiating. Boris Johnson resigned as foreign secretary in July, and losing both brothers is a sign that May’s compromise-seeking Brexit policy risks pleasing no one.

Read more: You Do the Math: Can May Get Her Brexit Deal Through Parliament?

Jo Johnson described the handling of Brexit as a "failure of British statecraft" on the scale of the Suez crisis of 1956 -- widely seen as a national humiliation, and said negotiations had left Britain facing either a deal that binds it to European Union rules forever, or the catastrophe of walking away without an agreement. He summed it up as a choice between "vassalage and chaos," and called for a second referendum as the only way out.

May’s negotiating team has been inching toward a deal in recent weeks, but glitches keep emerging. As concessions are made in Brussels, her Cabinet keeps raising objections. The Northern Irish party that props up her minority government also upped the ante on Friday, saying it couldn’t support what she’s proposing.

The main fight now is about whether the guarantees May is offering to keep the Irish border open after Brexit will end up binding the U.K. to European rules indefinitely. For Brexit-backers, that’s unacceptable, as they want to break free from European rules, regain sovereignty over regulation and strike new trade deals around the world. For the Northern Irish lawmakers, the risk that the province will end up being treated differently to Britain is enough to make them threaten to vote her deal down.

One Step Forward

Work in Brussels is expected to continue through the weekend, according to people familiar with the situation.

There’s been some progress, according to people on both sides. More advances are needed in the next week if a summit to sign off on the deal is to be held this month, they said.

One of the flashpoints now is a U.K. attempt to introduce a review clause into the divorce treaty to make sure that the Irish issue doesn’t keep the U.K. locked in the EU’s trading regime indefinitely.

Read more: The Brexit Irish Border Backstop Just Got Even More Complicated

EU ambassadors were told on Friday that there’s convergence on what the review mechanism should look like -- it would be triggered mutually rather than unilaterally by Britain -- and also on the customs arrangement for the so-called Irish backstop. But the EU side isn’t sure whether May has backing for it from her Cabinet, according to a person familiar with the situation.

There’s also disagreement about other measures tied to the backstop, such as keeping the U.K. aligned with EU rules to avoid unfair competition, and about what the draft declaration on the future trading relationship should look like. Member states are pushing for more scrutiny as the agreement gets closer to being sealed.

The U.K. is aiming for a breakthrough this month, and possible summit dates for the last weeks of November are being floated. Otherwise, the U.K. is going to have to step up expensive contingency planning and risk a dramatic market reaction.

That means the next few days are crucial.

--With assistance from Dara Doyle.

To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net;Tim Ross in London at tross54@bloomberg.net

To contact the editors responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net;Heather Harris at hharris5@bloomberg.net

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