May's Brussels Gains Eclipsed by Domestic Brexit Challenge

Updated on
  • Starmer outlines amendments that Labour seeks in EU Bill
  • Johnson pledges support after ‘more positive’ summit response

Sturgeon Says No Brexit Deal Would Be Devastating

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Theresa May’s battle to get her Brexit legislation through Parliament hit a new roadblock as the opposition Labour Party threatened to unite with rebels among her Conservatives, eclipsing the small victory she brought home from a summit of European Union leaders.

The U.K. prime minister returned from Brussels on Friday bolstered by encouraging words from her European counterparts, who signaled that a breakthrough in Brexit talks may be possible by year-end -- as long as she can convince her fractious cabinet to let her pay the EU a bigger divorce bill.

Keir Starmer

Photographer: Chris Ratcliffe/Bloomberg

Her political fragility was underlined on Sunday when Labour’s Brexit spokesman, Keir Starmer, issued her with an ultimatum: accept major changes to her landmark legislation, or risk defeat. His proposals would give Parliament a veto over the divorce deal, potentially undermining her negotiating strategy.

“I believe there is a consensus in Parliament for these changes,” Starmer wrote in the Sunday Times newspaper.

May leads a minority government, and her party is deeply divided over Brexit, with some lawmakers calling for a swift departure without a deal and others fighting to keep the closest possible links to Europe. While fighting rebels in Parliament, May also needs to convince the cabinet to support her next steps in divorce talks, which will remain deadlocked until she agrees to pay the EU billions more as an exit settlement.

Just two weeks ago, May was facing down an attempt to oust her. Her vulnerability at home helped convince European leaders to offer her warm words of support, according to EU officials. Now back home, she needs to figure out how to make concessions in Parliament and to Europe without it costing her job.

Theresa May

Theresa May

Photographer: Jasper Juinen/Bloomberg

Foreign Secretary Boris Johnson, who has been mooted as a possible replacement for May, offered his support to the beleaguered prime minister on Monday and said he was “glad” of the more positive than expected attitude among EU leaders at last week’s summit.

“The U.K. has made what we consider to be a pretty good offer,” Johnson said after a speech to a conference in central London. “I suggest to our friends and partners in Brussels that now is the time to get on with it.”

Six Demands

Starmer seeks to enshrine in the legislation the government’s plan for a two-year transition period after Brexit. For now, it’s just a verbal proposal and one that the business sector wants swiftly confirmed. His changes would also weaken provisions that hand sweeping powers to ministers to change laws, protect rights for workers and consumers as well as environmental standards deriving from the EU.

He also wants to ensure that powers coming back from the EU are handed to the semi-autonomous administrations in Scotland, Wales and Northern Ireland.

With former Tory cabinet ministers including Ken Clarke, Dominic Grieve and Nicky Morgan backing amendments that align with Labour’s demands, May is likely to offer compromises to secure passage of the bill.

The bill was due to be debated last week, until the government said the volume of proposed amendments meant it needed more time. No date has been set for the start of eight days of debate that it’s been allocated.

No ‘Nightmare’

May, who’s likely to update Parliament on Monday about last week’s EU talks, faces disagreement within her own cabinet about whether failing to reach a Brexit deal is an acceptable outcome.

While her government is preparing for that eventuality, Home Secretary Amber Rudd last week described it as “unthinkable.” However, on Sunday, International Trade Secretary Liam Fox called it “not exactly a nightmare scenario.”

“If we have no deal and we trade on current WTO terms, that’s the basis that, not only that Britain trades with countries like the United States, but that the EU trades with the rest of the world,” Fox said in an ITV interview. “I’m not scared of that.”

Scottish First Minister Nicola Sturgeon, who opposes Brexit, also disagreed.

“Theresa May is obviously very hampered by the views of the hard-line Brexiteers in her own party, but she really must put that to one side and act in the interests of the whole country, which is to get a deal,” Sturgeon said in a Bloomberg Television interview. “Leaving the European Union with no deal would be devastating for the Scottish economy and for the wider U.K. economy. It’s unthinkable that that could be allowed to happen.”

Domestically, May also faces calls to loosen the public purse strings, with Chancellor of the Exchequer Philip Hammond due to deliver his annual budget next month. Communities Secretary Sajid Javid suggested on Sunday that the government may choose to borrow to build new homes.

“What I want to do is make sure we are using everything we have available to deal with this housing crisis,” Javid told BBC TV. “Where that means, so for example, that we can sensibly borrow more to invest in the infrastructure that leads to more housing, take advantage of some of the record-low interest rates that we have, I think we should be absolutely considering that.”

Clouding Investment

The Federation of Small Businesses weighed in on Monday with demands for Hammond to budget for improvements to digital and road connectivity while removing barriers for small house builders. It’s one of five business-lobby groups that Sky News TV said have written to Brexit Secretary David Davis calling for “urgent agreement” on Britain’s transition period after the split.

“The prime minister and our government have got to provide businesses with the certainty they need so that they’re not making plans to move to other parts of Europe or other parts of the world,” London Mayor Sadiq Khan said on Monday on BBC Radio. “They can’t afford to say to their shareholders and those who work for their business come March 2019 ‘we forgot to make plans, we didn’t plan for this and as a consequence we’re falling off a cliff-edge.’’’

Survey data on Monday from another of the business groups, the EEF manufacturing lobby, said investment in new machinery has fallen to 6.5 percent of turnover from 7.5 percent a year earlier, while Brexit uncertainty is holding back investment plans for almost half of manufacturers.

“Brexit means the future outlook for investment is not clear cut,’’ EEF Chief Economist Lee Hopley said. “Political uncertainty is adding to the hurdles of cost and lack of skills in holding back spending on automation technology. The forthcoming budget can at least start to address the latter of these challenges.”

— With assistance by David Goodman, and Thomas Penny

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