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U.K.'s May Set to Put Brexit Plan to Cabinet Despite Splits

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(Bloomberg) -- U.K. Prime Minister Theresa May is preparing to ask the Cabinet to approve a draft Brexit deal potentially within days, if she can overcome new resistance to her strategy from euroskeptic Tories in her team.

During a Cabinet meeting in London on Tuesday, ministers including the pro-Brexit campaigner Michael Gove demanded to see the full government legal advice underpinning a plan for resolving the deadlock in the U.K.’s negotiations with the European Union.

While the gathering broke up without agreement after two hours, May’s officials are considering calling a second meeting -- potentially to sign off the proposal -- later this week, people familiar with the matter said. One person suggested an emergency Cabinet meeting could even be held on Saturday in the hope of securing a deal with the EU in Brussels before the end of the month.

“Don’t be under any illusion there is a lot of work to do,” May’s spokesman James Slack told reporters in London on Tuesday. So far no date has been set for another meeting of May’s top team, but it will be called “at the appropriate moment” before any deal is done in Brussels, he said.

Speculation that a deal was imminent intensified after the BBC and other outlets reported a leaked media-planning timetable that pointed to a deal getting done and presented to Parliament within three weeks. A government spokesman pointed out misspellings in the text and dismissed the notes as “childish” and not representative of the government’s thinking.

Brexodus

As British ministers fight among themselves over how to break the deadlock in negotiations, business isn’t waiting around for clarity. Tuesday saw a clutch of Brexit-related decisions to quit or scale-back investment in the U.K. In the most dramatic development, Bloomberg reported that a $240 billion-a-day short-term financing market is moving from London to Amsterdam, another blow to the City.

The U.K. will leave the EU with or without a deal on March 29, 2019. While 95 percent of the divorce has been agreed to already, negotiations are still stuck on the thorny question of how to avoid customs checks on the land border between the Irish Republic and Northern Ireland.

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

Unless this issue can be resolved, there will not be a withdrawal agreement at all, and the U.K. will crash out of the bloc with no deal. That outcome would cause major economic upheaval and could hit U.K. GDP by as much as 10 percent, according to government forecasts.

May wants to strike a deal on the divorce terms by the end of November in order to allow enough time to get the treaty ratified in the U.K. Parliament -- and to pass the other legislation needed to prepare the country for life outside the union.

But pro-Brexit ministers in the Cabinet still can’t agree with pro-EU colleagues over the nature of a legal guarantee -- known as the backstop -- to ensure the Irish border remains open to the flow of goods, whatever future trade arrangements the U.K. makes with the EU. Chief EU negotiator Michel Barnier said on Tuesday more work is needed on the backstop and it’s now time for the U.K. to make decisions.

Try Again

After Tuesday’s Cabinet meeting, Brexit Secretary Dominic Raab and Attorney General Geoffrey Cox were sent away to work up the highly complicated proposal for the backstop.

Cox briefed pro-Brexit ministers that while they might want to keep the power to pull Britain out of the backstop arrangement unilaterally, this would take too long to negotiate with the EU, and could result in talks dragging on into December. Instead, he suggested a mechanism for ending the backstop arrangements which would require the mutual agreement of both the U.K. and the EU, three people familiar with the matter said.

Read More: Meet Theresa May’s Top Lawyer and Latest Hurdle to a Brexit Deal

Even under this arrangement, the EU would not be able to keep Britain locked in the backstop forever, against its will, Cox is said to have argued. Cox is a pivotal figure and the fact he’s now said to be siding with an option that the EU is more likely to accept raises the chances of a deal being done.

But euroskeptics are still unconvinced. Gove and others demanded the full legal advice on which Cox based his arguments, although May promised only to show them a summary.

Pro-Brexit ministers believe Cox -- and by extension May -- are making a political argument about how easy it will be to negotiate a particular deal, not a legal one over which deal is best for the U.K.

Several people familiar with the matter suggested that the Cabinet could agree its position within days, despite Brexit-backers’ concerns. “No one in there is a wrecker,” one said.

--With assistance from Radoslav Tomek.

To contact the reporters on this story: Tim Ross in London at tross54@bloomberg.net;Robert Hutton in London at rhutton1@bloomberg.net;Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Emma Ross-Thomas

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