business

Brexit Bulletin: Intensive Engagement Needed

Brexit Rebels In Scotland Adding To May's Disarray

318 Days to Go

Today in Brexit: Michel Barnier and team bemoan a lack of progress, while Theresa May chooses to pick her battles.

Separation talks with the U.K. remain stalled, the European Union’s chief Brexit negotiator Michel Barnier told member states, with disagreements still unresolved from the Irish border to who should rule on disputes over the withdrawal agreement.

“The Council was informed that not much progress has been made” since the last meeting of EU leaders in March, Bulgarian Deputy Prime Minister Ekaterina Zaharieva told reporters in Brussels after a Monday update from Barnier. Emphasizing the hurdles ahead, she noted that the October deadline both sides want to meet is “only five months from now” and called for “more intensive engagement” from the U.K. in coming weeks.

Michel Barnier.
Photographer: Jasper Juinen/Bloomberg

Barnier did sound a more optimistic note on security, saying that a future EU-U.K. partnership “could be underpinned by a set of mechanisms – dialogue, consultation, coordination, cooperation, exchange of information.” Still, a lack of progress on how to keep the Irish border open after Brexit, whether the European Court of Justice will still have a role in British affairs and “all remaining separation issues” could sour talks on the future relationship between the two sides, Zaharieva signaled.

The deadlock increases the risk of a cliff-edge Brexit in less than a year, as Theresa May’s government comes under pressure from hardliners in her party to opt for an abrupt departure rather than give in to EU demands.

Zaharieva, whose country holds the rotating presidency of the EU, dismissed May’s proposals for a bespoke customs arrangement between the EU and the U.K., saying that “if they want to be part of the customs union, the customs union should be as it is now.” She also reiterated that the EU sees current U.K. proposals on Ireland as a recipe for a “hard border.” 

Meanwhile, May looks set to focus her negotiating efforts on avoiding a hard border on Ireland, and let the war in her Cabinet about post-Brexit trade rage on.

Discussions among senior ministers over how closely to mirror the EU’s tariff and customs rules after Brexit will probably last for at least another two weeks, according to an official. With that in mind, the summit of EU leaders at the end of June is likely to focus on finding an insurance plan that would avoid a hard border if no other arrangements are in place, the official said.

May put the efforts in on Monday, meeting nearly every Conservative backbench MP in an attempt to head off a rebellion over her customs plans – but admitted that neither of her current options will work, the Telegraph reported. Perhaps inevitably, the Times said, this saw her clash with arch-Brexiter Jacob Rees-Mogg. He has his say in the pages of Tuesday’s Telegraph. 

Today’s Must-Reads

  • Extending transitional customs arrangements with the EU could be a way to resolve the Irish border question, according to people familiar with the British position. 
  • Brexit rebels in Edinburgh are adding to Theresa May’s woes. Barring an 11th-hour deal, the Scottish Parliament is expected to withhold consent on Tuesday for the prime minister’s key Brexit legislation. While Westminster has the right to disregard the vote, May would be at risk of imposing British sovereignty on Scotland.

Brexit in Brief

No Norway Deal | Theresa May wasn’t the only one meeting her MPs on Monday. Jeremy Corbyn told Labour lawmakers at a private meeting in parliament that a “soft Brexit” Norway-style settlement, including membership of the European Economic Area, cannot be considered by the party, according to the Guardian.

Brexit Fallout | British business is “wasting time” reviewing the gender pay gap when it should be focused on limiting the fallout from Brexit, according to Michael Spencer, the billionaire founder of electronic markets operator NEX Group.

Galileo Threat | The U.K. may withdraw from the EU’s Galileo satellite navigation system if the bloc continues to play “hardball” over future British involvement, Science Minister Sam Gyimah said on Monday. Michel Barnier said later that cooperation will need to be “on a new basis” after Brexit.

Tax Windfall | A proposed tax on financial transactions in 10 EU countries could generate about 19.6 billion euros of annual revenue, though Brexit could make collection more difficult, according to a new EU estimate.

Exiting Poles | The number of Poles considering emigration to the U.K. has dropped by 13 percentage points from a year ago, making it a less desired destination for Polish job-seekeers than Germany and the Netherlands, according to a survey by recruiting and human-resources company Work Service SA.

Wages Growing | A report on Tuesday is forecast to show that the squeeze on British pay packets, partly induced by Brexit, probably came to an end in the first quarter as wage growth overtook inflation.

Office for National Statistics, Bloomberg survey

Coming Up | U.K. Trade Secretary Liam Fox will warn that Britain must focus on trade deals with countries outside of Europe or risk losing billions in tax revenue, the Times reports. Meanwhile, May’s inner Brexit “war cabinet” is due to meet.

Something to add? 
Please join our Facebook group, Brexit Decoded, and follow us @Brexit on Twitter.

Missed yesterday’s Bulletin?
You can catch up here, or sign up to get it as a daily newsletter.

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