Brexit Bulletin: A Key Departure

333 Days to Go

(Bloomberg) -- Today in Brexit: The inner circle of Cabinet ministers who will decide what kind of Brexit the U.K. seeks has lost a pro-EU voice. 

Prime Minister Theresa May's Brexit war Cabinet has lost one of its most important pro-European ministers with the resignation of Home Secretary Amber Rudd. And the timing is crucial: the core group of ministers meets this week to hash out what the future relationship with the European Union should look like.

May will have to name a successor quickly to one of the most important roles in government. Depending on who it is, it could shift the balance toward a harder break with the EU. Even if the new secretary leans against Brexit, he or she probably won't have the stature of Rudd – a loyal May ally who was seen as a potential leadership candidate one day.

Meanwhile, tensions in May's Cabinet over Brexit are spilling into the open. Rudd's resignation was about an immigration scandal, but she also incurred the wrath of pro-Brexit Conservatives last week when she let slip that the Cabinet wasn't united behind May's post-Brexit plan and made a sarcastic comment about the dynamics in the group. Some have seen the whole affair as a proxy war for Brexit at a time when euroskeptics are increasingly anxious that their vision of the divorce might be betrayed. 

Rudd is not the first loyal, pro-EU ally May has lost. Damian Green, her trusted de-facto deputy who was forced to quit over a pornography scandal, had also campaigned to stay in the EU.

Rudd's loyalty was on display last week as she protected May, her predecessor in the Home Office, from the immigration scandal. The question is what pose she will strike in Parliament now that she's liberated from the constraints of Cabinet discipline, just as Parliament is showing increasing initiative in its efforts to influence Brexit. 

Today's Must-Reads

• As Theresa May charts the U.K.'s perilous path out of the EU, there's one man whose verdict on her plan matters more than almost anyone else in her team. It's Michael Gove, Tim Ross writes.
• May has been told to fire her chief Brexit negotiator, Oliver Robbins, and abandon his customs partnership plan, the Sunday Times reported. 

Brexit in Brief

More Davis Threats | Brexit Secretary David Davis is “ready to resign” if Britain stays in the customs union, his friends told the Express. Note that in December it was reported that he had threatened to resign if Green was sacked. He didn't.

Soft on Immigration | Britain is set to offer the EU a deal on future immigration from the bloc that is very similar to current free movement rules, the Independent reports. The U.K. would have the right to an emergency brake or other restrictions when needed, the paper said. Remember that the rhetoric from Brexit-backing ministers recently has been pretty liberal on immigration.

Deutsche Pause | Deutsche Bank AG is slowing down its Brexit preparations, according to an internal memo seen by Bloomberg. The lender has decided to use the extra time provided by the transition period to move clients from London to Frankfurt more slowly.

Business Cheer | British businesses are feeling upbeat about the economy, according to a Lloyds Bank survey. Just over half said they were more optimistic about the economy than they were three months ago. It was taken before last week's disappointing growth figures.

Banking Calm | Banks seem oddly unconcerned about Brexit, judging by cross-border lending, argues Bloomberg's Mark Whitehouse.

Coming Up | Chief EU negotiator Michel Barnier visits the Irish border and meets Irish Prime Minister Leo Varadkar, with a press conference at 9:15 a.m. On Wednesday through Friday there's another round of negotiations in Brussels. The EU Withdrawal Bill is also back in the Lords this week. Local elections are on Thursday and some May critics and remainers have been keeping a low profile until after those polls, which are expected to be bloody for the Conservatives.

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To contact the author of this story: Emma Ross-Thomas in London at erossthomas@bloomberg.net.

To contact the editor responsible for this story: Anne Swardson at aswardson@bloomberg.net.

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