Brexit Bulletin: A New Idea for Ireland

332 Days to Go

(Bloomberg) -- Today in Brexit: The U.K. has a new proposal on the Irish border, as a June deadline looms.

The British have a new plan to kick-start Brexit talks and make progress on the Irish border issue, which is still posing the greatest risk to a final deal.

Prime Minister Theresa May's team of negotiators have drafted a new template for how the U.K. and EU should work together on Britain's two favored options for addressing the border question, Tim Ross, Ian Wishart and Dara Doyle report. Talks resume this week in Brussels; the EU and Ireland have both called for progress on the border question by the end of June. 

Speaking close to the Irish border on Monday, EU chief negotiator Michel Barnier promised to work “day and night” for a solution in the weeks leading up to the June summit of EU leaders. Brexit Secretary David Davis said he agreed with Barnier on the “need to move quickly in discussions” and said the U.K. has put forward proposals.

The U.K.'s preferred solution – known as Option A – is to use a sweeping new free-trade agreement and customs deal with the EU to avoid the need for tariffs and goods checks at the border between the Irish Republic and Northern Ireland. 

If this can't be agreed in time, Option B would be to use technological solutions and “trusted trader” schemes to minimize checks on goods at the border. Two people familiar with the matter, who asked not to be named, said the U.K.'s new plan involved working on options A and B together. Parts of Option B could enhance Option A, according to the plan.

The EU insists there must be a “backstop” in case the U.K.'s plans don't work – and EU officials say in private that they expect it will end up being used as they don't think options A or B are feasible. However, the backstop proposed by the EU so far is unacceptable to the U.K., as it would mean creating a border between Northern Ireland and the rest of the U.K.

The new British proposal will also aim to bridge the divide between warring factions in May's Cabinet. Her inner circle of ministers meets on Wednesday, with the new pro-Brexit Home Secretary Sajid Javid attending for the first time instead of his pro-EU predecessor Amber Rudd.

Today's Must-Reads

• Sajid Javid's appointment as home secretary tips the Brexit balance of May's core team toward a harder split
• The House of Lords defeated May on Brexit once again, voting to give Parliament a say before the government can leave the EU without a deal.

Brexit in Brief

Barnier's Warning | Chief EU negotiator Michel Barnier visited the Irish border on Monday, and said that Brexit talks could yet fail as the two sides grapple with the issue. Still, he's confident an agreement can be reached with a “constructive attitude” on each side, and said June was a “stepping stone” to reaching a final deal.

Record Deals | Dealmaking by U.K. companies is heading for a record, spurred by foreign takeovers and domestic consolidation efforts, Manuel Baigorri and Ruth David report. Some companies are seeking to bolster their defenses before Brexit, while other firms see their concerns abating about longer-term economic prospects following the agreement of a transition deal, advisers to the firms said.

Ignoring the Challenge | Seven in 10 U.K. exporters expect foreign sales to increase over the next three years, but only a third have an export strategy, according to a report by the Chartered Institute of Marketing and PwC. Small and medium-sized businesses are naive about the challenges posed by Brexit, the report says.

Election Aims | May's Conservatives might be bracing themselves for a tough night when voters elect local officials on Thursday, especially in London, but leading pollster Sir John Curtice believes the Tories could win control of some councils in Leave-supporting areas such as Peterborough and Rugby, The Sun reports.

Coming Up | Davis appears before the Lords' Brexit Committee at 4:30 p.m. Trade Secretary Liam Fox gives a speech on African trade at 10 a.m. The key meeting of the Brexit inner Cabinet is on Wednesday and Brexit talks in Brussels are scheduled for Wednesday through Friday. 

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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: Adam Blenford at ablenford@bloomberg.net, Patricia Suzara

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