Brexit Bulletin: Not Quitting

  • Theresa May says “there’s a long-term job to be done”
  • Prime minister is leading trade delegation to China

The Mounting Brexit Troubles for Theresa May

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Theresa May flew to China overnight but when it comes to her position, she’s making it known she’s not going anywhere.

“I’m not a quitter and there’s a long-term job to be done,” the embattled prime minister told reporters on board her Royal Air Force jet at the start of the three-day trip. Asked if she would fight any formal challenge to her leadership, May dismissed the idea: “Hypothetical.”

Having clung onto her job since leading her party to a disastrous election in June, May has come under mounting pressure in recent days from some of her own lawmakers. They criticized her handling of a reshuffle of ministers at the start of January, and now there’s discontent about her failure to take more of a lead on Brexit as negotiations get moving with the European Union over a transition period. Some in her party are privately plotting to replace her, media reports say.

The prime minister runs a minority government, holding office thanks only to the support of a tiny band of 10 lawmakers from Northern Ireland’s Democratic Unionist Party. Many Tories believe she must be replaced before the next election in 2022. On the plane, May declined to say whether she planned to lead the party into that contest.

The Conservative Party has got form when it comes to unceremoniously dumping its leaders. As Kitty Donaldson writes, Margaret Thatcher was at a summit in Paris when the tide turned. It was a classic when-the-cat’s-away example of how rank-and-file lawmakers who are disgruntled can stick the knife in.

Theresa May in Wuhan on Jan. 31.
Photographer: Chris Ratcliffe/Bloomberg

Whether or not there’s a lesson there for May, her trip to China, leading a 50-strong trade delegation, represents a Brexit reality. The EU’s 27 remaining countries are refusing to give the U.K. unfettered access to its single market in the way some in London once thought possible. At an internal meeting of diplomats in Brussels on Tuesday, EU officials made the point once more that Britain’s services industries—and financial services in particular—won’t receive treatment that’s any more special than Canada enjoys in its free-trade deal with the EU.

While the U.K. can’t sign any deals outside the EU before leaving the bloc—and wouldn’t be able to implement them before at least 2021—May is hoping to strike as early as she can.

“I want to step up our relationship with China as it opens up its markets, spreads its prosperity and embraces free trade,” May writes in Wednesday’s Financial Times. “And I want to see that this happens in a way that protects our values, ensures global security, and advances the multilateral system for which we have fought so hard.”

Brexit Latest

Forcing Publication | The U.K. opposition Labour Party plans to force May’s government to release an analysis on the economic impact of Brexit using a little-used Parliamentary ruse it successfully deployed last year. In a vote on Wednesday, lawmakers will be asked to vote on a “humble address” requesting the release, which will be binding on the government. The same archaic procedure in November led to the publication of research into how Brexit will affect 58 industry sectors. 

Liam Fox
Photographer: Luke MacGregor/Bloomberg

Free to Trade | Trade Secretary Liam Fox, a veteran Brexit campaigner, warned in an interview with Bloomberg he won’t accept a deal with the EU that stops the U.K. signing trade accords with other countries. His comments follow reports that some of May’s officials believe the U.K. should replicate membership of the EU’s customs union after Brexit.

You Asked for It | Bulgaria’s foreign minister dismissed the notion that the EU was imposing a second-class membership status on Britain by opening negotiations on a 21-month post-Brexit transition period for the country, saying that instead it was an act of generosity. “This is goodwill from the European part because we accepted this transition period,” Ekaterina Zaharieva said in an interview with Bloomberg. “We didn’t ask for a transition period. It was not our idea. That’s why it’s not correct when they say ‘You make us a vassal state.’ Because they asked for it.”

Wing and a Prayer | Airbus has been approached by at least seven countries looking to poach future wing production after the company raised concerns about Brexit, according to people familiar with the matter, Benjamin Katz reports. It means Britain’s five-decade dominance of wing construction for Airbus jets is under threat.

Norway Hopes | A Brexit deal that keeps trade as open as possible would be best for companies operating in the U.K., Bank of England policy maker Silvana Tenreyro said in an interview with Northeast Press newspaper. Companies such as Nissan Motor Co. would benefit from a arrangement with the EU similar to Norway’s, she was cited as saying while visiting Sunderland.

Longer Transition | Ireland’s junior finance minister Michael D’Arcy told the FT that wrapping up a trade agreement inside the 21-month transition period “is going to be really, really difficult.” It will be “practically impossible” if the U.K. leaves the single market and the customs union, he said.

The Next Battle | Bank of England Governor Mark Carney said he can fully focus on tackling inflation as the drag from Brexit on investment and the economy starts to recede. “As slack in the economy has been taken out, we’ve moved into a more conventional area for monetary policy where the focus is increasingly on returning inflation sustainably to target over an appropriate horizon,” he said on Tuesday.

On the Markets | The pound surged 4.5 percent versus the dollar in January, its best run in the first month of a year in Bloomberg data going back to 1971, driven in large part by a weak dollar. It’s hovering near $1.42 this morning. In the same period, it’s up 1.1 percent versus the euro, driven in part by optimism about a smoother Brexit.

And Finally...

Britain’s Defense Secretary Gavin Williamson has ordered all EU flags removed from the headquarters of his ministry, according to a report in the Sun.

Williamson’s “symbolic salvo” to “boost British pride,” as the paper puts it, comes despite his campaigning for the U.K. to remain part of the bloc during the referendum in 2016.

The blue and gold flag of the (still) 28 members of the EU will be replaced by Britain’s union flag, after Williamson was reportedly “stunned” to find the European version outside meeting rooms at the Ministry of Defense.

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