Theresa May will bring her senior ministers together to thrash out a Brexit compromise on Friday, but sources in her cabinet, the Conservative party, and European governments are dismissive about her chances of finding a compromise that resolves a seemingly intractable political deadlock – regardless of whether she wins over her cabinet.
With the Brexit process approaching its most treacherous point yet, May has summoned her senior ministers to Chequers, the prime minister’s official country residence, for an all-day summit. After months of bickering between senior ministers, May will attempt to broker a unified government position on the UK’s future economic relationship with the EU, including customs arrangements.
Some ministers were briefed earlier this week by officials on plans May will put forward tomorrow to resolve a stalemate on customs arrangements. They were left confused and unconvinced, according to a well-placed government source.
Sources on all sides of the political process have expressed frustration at May’s cautious approach and are sceptical that she’ll secure an agreement with the EU by the October deadline set by both sides. Regardless of the outcome of Friday’s summit, the chances of Britain crashing out without a deal in March 2019 appear to be mounting by the day.
The source said ministers have privately lamented that May lacks a clear vision for Brexit, which makes her unable to push anything through with conviction. Referring to the latest iteration of her plans, the source compared the prime minister’s moves to a tech startup constantly changing its business model in the hope of finding something that works.
On the back benches, Tory MPs on both sides of the Brexit debate are more pessimistic than ever about the direction of the process, party insiders said.
With a working majority of only 13 in parliament, propped up by Northern Ireland’s DUP, only a handful of rebels need to cross the floor to vote with Labour to defeat the government. And with disgruntled members on both sides, May is facing the extraordinary prospect of both pro- and anti-Brexit MPs joining the opposition to vote against her.
One Remain-supporting Conservative told BuzzFeed News that in trying so hard to put off divisive decisions, May is making nearly everyone in her party unhappy.
MPs on the Remain side are far from united about what to do next, the MP said. Many will side with May ultimately, to avoid further political turmoil, but some are talking about voting against the final deal because, as they see it, even a “soft” Brexit will harm the economy. They hope that voting down the deal would force May to rethink leaving the single market and customs union – or even to hold a second referendum on EU membership.
On the other side of the party, die-hard Eurosceptics are threatening privately to collapse May’s final deal for different reasons.
Some members of Jacob Rees-Mogg’s European Research Group (ERG) are worried that May will use the Chequers summit to push through a “soft” Brexit, in which the UK will remain closely aligned to the EU’s regulations and institutions after it leaves the bloc.
According to people familiar with their discussions, these MPs believe that voting down the deal would cause the UK to “crash out” of the EU in March 2019, which they regard as a better outcome than remaining in the EU’s regulatory orbit indefinitely. Those ERG hardliners are unpersuaded by arguments that leaving without a deal will be economically catastrophic, or that defeating May will lead to the government falling.
Meanwhile EU leaders are bewildered that the UK is still debating matters that they rejected months ago. The overwhelming feeling in Europe’s capitals, sources in major EU governments said, is that May hasn’t yet grasped the implications of her negotiating “red lines” on leaving the single market and customs union and ending the jurisdiction of the European Court of Justice. At the same time, they contend, the EU has been firm and clear on its positions since the referendum two years ago.
EU leaders have repeatedly said that Britain will have to be clear in its demands if negotiations are to progress – and if a deal is to be signed off by the EU’s remaining 27 member states in October.
“We urgently need clarity about every aspect of the future relationship between the EU and the UK,” Dutch prime minister Mark Rutte told May over lunch earlier this week.
At Friday’s retreat, May is expected to present a “facilitated customs arrangement” to bridge the differences between the two earlier proposals that ministers had been debating.
Previously, the choice had been between a customs partnership, which would see the UK collect duties on imports at the rate of the EU’s tariffs (and is advocated by ministers pushing to keep the UK relatively closely aligned to the EU’s customs and regulatory regimes), and a more detached arrangement, known as “maximum facilitation” or “max fac”, which would rely on technology to minimise border checks (which is favoured by the Brexiteers in cabinet).
Ministers, while divided, had been leaning towards max fac. However, Downing Street took everyone by surprise this week by proposing a third alternative.
According to reports by ITV’s Robert Peston, May’s “third way” would mix elements of the two proposals, but, crucially, would retain key aspects of the customs partnership. The prime minister is also expected to argue for an approach that in effect would aim to keep the UK in the EU’s single market for goods.
A government source described Peston’s report as “mostly accurate”.
Reports on Thursday confirmed Brexiteers' fears that any close alignment with the EU’s customs and regulatory regimes would restrict the UK’s ability to strike comprehensive trade deals. The prime minister's spokesperson denied claims it would leave Britain unable to do a trade deal with the US.
PM spokesperson: "It's categorically not true that we will not be able to strike a trade deal with the US."
An agreement at Chequers is seen as a fundamental step towards the publication of a Brexit white paper that sets out in detail the UK’s stall.
In the lead-up to this week’s meeting, a string of businesses spoke out publicly for a softer Brexit, warning of severe economic consequences if the UK crashes out of the union without a deal. The latest warning, reported by the Financial Times on Wednesday, came from Jaguar Land Rover, which said that a hard Brexit would cost £1.2 billion a year and make it unprofitable to remain in the UK.
JLR is a great British success story. We are determined to make sure that it can continue to prosper and to invest in Britain. https://t.co/DQ5lSpM2ob
At Chequers, the business secretary, Greg Clark, and the chancellor of the exchequer, Philip Hammond, are expected to make the case for a business-friendly Brexit.
Hammond will present to ministers the Treasury’s latest analysis of the impact Brexit will have on the economy under different scenarios. BuzzFeed News understands that the figures the chancellor will present are essentially the same as those in the impact assessment leaked to this website in January, which was later released by the Department for Exiting the EU. Those figures showed that the UK economy would be worse off under all scenarios outside the single market and customs union.
Whatever customs arrangement May is able to secure from her cabinet this week would need to be approved by the EU.
And here is May’s biggest obstacle: Even if she gets her proposed compromise through her party, it is likely to be viewed by the EU as incompatible with the rules of its single market.
At last week’s European Council summit in Brussels, EU leaders were united against anything that could split the single market and its four freedoms of movement – of goods, services, capital, and people – an EU leader told BuzzFeed News after the meeting. There was “total unity” in the room, the senior official said.
In order to secure an exit deal and a two-year transition period, the UK and the EU still need to agree on a backstop solution that avoids a hard border in Northern Ireland under all circumstances, independently of the shape of the future relationship between the UK and the EU. This needs to happen before negotiations about the future can begin in earnest.
A senior German government official involved in the Brexit process told BuzzFeed News last month that any backstop proposal that would amount to the UK as a whole potentially staying indefinitely in parts of the single market would be unacceptable.
“The UK approach so far has been to fudge. But that won’t work for Northern Ireland,” the official said.
The same official also explained that some of the ideas reported in the UK, such as staying in the single market for goods, or Britain remaining aligned with the EU’s regulations and paying a price for any future divergence, were unlikely to fly because they either amounted to cherry picking or would require a “parallel universe” of legislation.
The official predicted that the UK’s position would eventually land somewhere on a spectrum between what business wants and what Brexiteers will accept.
“My feeling is the UK wants to get to March without too many commitments on the future relationship agreed before leaving,” the official said. “May will say, ‘we’ve left, now we need to make concessions,’” the official added. “But it will be difficult to do a deal in two years [during the transition].”