Brexit Bulletin: A New Chapter

329 Days to Go

(Bloomberg) -- Today in Brexit: With local elections out of the way the talks can get going again, and the EU needs some answers. 

Welcome to May 4. It's the day European Union officials have long identified as the start of the next Brexit chapter.

Negotiations have been effectively suspended for six weeks, a period bookended by the leaders' summit on March 23 – when Theresa May won provisional backing for the U.K.'s transition period plan – and yesterday's local elections in England. When talks have taken place they have largely focused on the technical details of Britain's withdrawal, ignoring the huge customs union-shaped elephant patrolling the room.

The EU was willing to go along with that, but now officials want answers. When both sides' negotiators meet at the European Commission today, the U.K. team will be asked for a clearer explanation of what the government's plan for customs is, and how that will solve the Irish border problem. May's failure to convince her own Cabinet on Wednesday that the U.K. should pursue a middle-way “customs partnership” makes that task all the harder.

No solution is straightforward. U.K. officials think the country will have to remain in the customs union even beyond the 21-month post-Brexit transition period because new border measures just won't be ready in time, Tim Ross reports today.  May and her divided cabinet now have two key decisions to make: first, what kind of customs deal they want with the EU; then what temporary measures will apply until the new system is operational.

All of which makes the next eight weeks another crucial period in the process. Neither side sees the next summit on June 28-29 as the moment that will make or break Brexit, but the EU does want definite progress. The EU side frets about going into the final days of the negotiations in October still without a plan for Northern Ireland. The Times reports today that Ireland has the backing of European leaders to pull the plug on trade talks next month if May doesn't satisfy. 

And what of those local elections, the biggest test of public opinion since the general election nearly a year ago? Results so far indicate that neither May nor Jeremy Corbyn's opposition Labour Party will be able to claim much of a success and that the country is still divided along Brexit lines. Labour did well in London, which voted to remain in the EU in 2016's referendum, but struggled elsewhere, while the Conservatives made gains in more rural areas. 

Today's Must-Reads

• We reckon Theresa May now has four options: delay, U-turn, call an election or walk away
• The Centre for European Reform's argues British participation in the EU's space program shows how difficult it is to disentangle
• Meet Olly and Sabine: The secretive English civil servant and Shakespeare-loving German trying to make Brexit work.

Brexit in Brief

No Rise | The Bank of England won't raise interest rates next week but will start soon, according to the National Institute of Economic and Social Research. Announcing its latest outlook, Niesr said it now expects the BOE to raise borrowing costs in August instead of this month after the economy made a poor start to the year. We've tracked the changing prospects for a May hike.

Pay to Play | EU Budget Commissioner Guenther Oettinger said he hopes the bloc can agree with the U.K. for continued payments into the EU budget for access to programs in research, aerospace and the Galileo satellite navigation system.

Bullying Accusations | John Bercow, the Speaker of the House of Commons, was accused of bullying by a former top official in the upper house, the House of Lords. David Leakey told the BBC that Bercow could be “intimidating,” “unreasonable” and “disproportionate,” and that he was guilty of “mocking people.” The accusations are denied by Bercow's office.

Lingua Franca | The European Commission has no plans to downgrade the use of English after Brexit, despite occasional jibes about how the language would be less significant when the UK leaves the bloc, the Guardian reports. The plan to continue using English in meetings and documents is buried in the small print of the EU's 2021-27 budget document.

Storm in a Teacup | A lively debate (that wasn't supposed to be about Brexit) took place in the European Parliament yesterday. In case you missed it, here's a quick precis: 1. European Commission President Jean-Claude Juncker raised Brexiteer hackles by saying British officials working in Brussels “deserve” Belgian citizenship. 2. Nigel Farage, the anti-EU campaigner, described Belgium as “artificial” and “not a nation.” 3. Guy Verhofstadt, the parliament's (Belgian) Brexit coordinator said we'd all “see how real Belgium is when we play England in the World Cup.”

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To contact the author of this story: Ian Wishart in Brussels at iwishart@bloomberg.net.

To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Patricia Suzara

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