Brexit Bulletin: Showdown at Dinner

  • May has written letter to EU citizens reassuring them they can stay
  • EU diplomat puts chances of breakthrough in December at just 50-50
May Says U.K. to Continue Playing Full Role in EU

Sign up to receive the Brexit Bulletin in your inbox, and follow @Brexit on Twitter.

Prime Minister Theresa May will once again use a dinner in Brussels to push for a breakthrough in Brexit talks. But the 27 European leaders she addresses won’t offer much in response.

May will demand that talks move on to the future trading relationship, without fleshing out her offer on the contentious divorce bill, Bloomberg’s Ian Wishart and Tim Ross report. The EU’s decision on whether talks can progress will be postponed until December, and even then there’s no guarantee. A senior EU diplomat, speaking on condition of anonymity, said he saw the chances of starting trade talks by year-end as only 50-50.

Failure at that point would leave a narrow window for the U.K. to settle its future relationship with its biggest trading partner, and increase the risks of crashing out without a deal. Any agreement needs to be signed off by the European Parliament before Brexit happens on March 29, 2019.

The Europeans will discuss non-Brexit matters as a group of 28, then wait until May leaves on Friday morning before discussing the U.K. The draft summit conclusions indicate they will offer some warm words of encouragement, and a proposal to prepare their own side for trade talks so they are ready when the time comes to start negotiations.

In an effort to generate goodwill going into the summit, May released a letter to the 3 million EU citizens living in Britain, telling them she wants them to stay. May, who has been criticized for using people as bargaining chips, also promised a straightforward process for residents to obtain the legal right to remain.

Still, a formal deal remains to be hashed out.

“As I travel to Brussels today, I know that many people will be looking to us – the leaders of the 28 nations in the European Union – to demonstrate we are putting people first,” May said in the letter released by her office in London. “I couldn’t be clearer: EU citizens living lawfully in the U.K. today will be able to stay.”

There are three issues where the EU wants to see “sufficient progress” before it will discuss trade: EU citizens’ rights, the financial settlement – the thorniest matter – and the Irish border, which will become the U.K.’s frontier with the EU after Brexit.

With talks deadlocked, each side says it’s up to the other to make the next move. May’s team thinks she took a political risk by offering in her recent Florence speech to pay into the EU budget for two years after leaving. The EU says that offer doesn’t go far enough, and wants more detail to break the stalemate.

EU leaders are aware that May’s position at home is fragile, faced with hardliners on her own side as well as an ascendant Labour Party. There will be a reminder of that on Thursday when Labour leader Jeremy Corbyn gives an address at the Socialists’ pre-summit gathering just before midday.

European leaders are acutely aware that May won’t necessarily be the leader who sees Brexit talks through to the end.

Theresa May.
Photographer: Luke MacGregor/Bloomberg

Brexit Latest

Culture Clash | It’s not just the bill holding talks back, but an irreconcilable culture clash, Bloomberg’s Ian Wishart reports from Brussels. From presentational details like turning up in shorts to fundamentally different views on what being a member of the club means, divorce talks were never going to be easy.

The Most Important Man | As May prepares to take her flagship piece of Brexit legislation back to Parliament, one man more than any other has the power to frustrate her efforts: Dominic Grieve. The pro-EU former attorney general is gathering support from Tory and Labour lawmakers for amendments he’s drafted to challenge key parts of the bill, Bloomberg’s Kitty Donaldson and Robert Hutton report.

Spanish Planning | All Spain’s ministries are analyzing the consequences of a no-deal Brexit. Firm contingency plans aren’t in place, but it’s a “possibility we have to take into account,” says Deputy Europe Minister Jorge Toledo.

German Calm | Germany sought to ease tension the day before the summit, saying a deal will eventually be reached and it would be wrong to take an overly negative view.

Derivatives Dodging | English law is losing some standing. The International Swaps and Derivatives Association has written to members asking whether to offer the option of Irish or French law for derivative contracts. The current choices are English or New York law, and the proposal would allow contracts to be governed by the laws of an EU member.

British Wizz | Eastern Europe’s biggest discount airline, Wizz Air Holdings Plc, is setting up a U.K. arm to safeguard flights in the event Brexit disrupts operating rights. London-based Thomas Cook Group Plc will do the same in Spain.

Hardliners | European Commissioner Phil Hogan aimed some unusually frank and colorful language at the U.K. and its Brexit policies, accusing elements on the U.K. side of bullying. “What becomes more obvious day-by-day is that the Brexiteers are hooked on brinkmanship,” he told RTE.

Irish Catastrophe | A hard Brexit would be “catastrophic,” and bring back “sectarianism and untold problems,” former Irish Prime Minister Enda Kenny said in an interview with Bloomberg TV.

Ex-Irish PM Kenny Says Hard Brexit Would Be Catastrophic

On the Markets | An intriguing idea from some investors who spoke to Bloomberg’s Anchalee Worrachate: get a mediator or peacemaker involved and watch sterling and the euro strengthen. The pound rose for the second day on Thursday.

And Finally...

Brexit is causing actors, directors and production workers to move abroad, and restrictions on free movement risk a “catastrophic” loss of skills in the industry, according to the Creative Industries Federation. “Losing access to crucial international talent will damage our ability to produce the films, books and television that define Britain around the world,” says John Kampfner, chief executive officer of the CIF. 

Daniel Craig stars in the James Bond film Spectre.
Source: Metro-Goldwyn-Mayer Studios Inc.

For more on Brexit follow Bloomberg on Twitter, Facebook and Instagram

    Before it's here, it's on the Bloomberg Terminal.