Brexit Bulletin: Triple Grilling

(Bloomberg) -- Today in Brexit: The prime minister faces a grilling on her Brexit strategy, as the only way out of the stalemate is toxic for her own party.

What's Happening?

If Brexit is a complicated game of chess, the prime minister could soon be out of moves. 

Theresa May will face questions on her strategy at three public and private meetings on Wednesday. She wants to wrap up talks with the opposition Labour party on a compromise Brexit solution next week, according to a person familiar with her thinking. Channel Four reports that she's about to offer Labour pretty much everything it wants to get a deal done.

But the risks for Labour in signing off on a Conservative Brexit are high and many on her own side are watching out for signs she is capitulating further on her red lines. 

Added to this is the threat of Thursday's local elections and the EU poll later in May. The Conservatives are facing a drubbing in the former and haven't even launched their campaign for elections to the European Parliament: They know it will be all but impossible  to compete with Nigel Farage's  Brexit Party unless they can plausibly argue that the divorce will soon be delivered.

May's only remaining move may be to try and get Britain as close to leaving the EU as possible by polling day on May 23, hope her party does better than the 13 percent support seen in YouGov's latest poll, and make sure Farage's candidates never take their seats. 

Today's Must-Reads

• The Labour Party's ruling council voted Tuesday to back a second Brexit vote only as a last resort, a decision that sets the party up for its own clash with members
• The current lull in Brexit and U.K. politics is like the eye of a hurricane – an ominous calm that seems set to herald another storm, writes Rafael Behr in the Guardian
• The local elections this week could begin a process that ultimately destroys the Conservative party, according to Telegraph assistant editor Philip Johnston. The losses may not be as bad as in 1995 but the Conservatives' position is worse, he argues.

Brexit in Brief

Going Bust | The number of companies in England and Wales unable to pay debts rose by 6 percent in the first quarter, government figures published Tuesday showed. In an illustration of the damage Brexit uncertainty is inflicting on corporates, insolvencies also rose. 

Turnout Worries | Close to eight million eligible voters are not registered ahead of the EU elections later in May, according to research commissioned by Best for Britain. Discrepancies are particularly large among EU citizens, private renters and young people, according to the study. Pollster John Curtice will be talking about the elections at an event this morning organized by The UK in a Changing Europe, moderated by Bloomberg's Rob Hutton.

Summer Showdown | BlackRock Inc. is increasingly worried about May's political survival. If the results of the local and EU elections are really terrible, a U.K. leadership election over the summer is a possibility, says Rupert Harrison, a portfolio manager who used to work for former Chancellor of the Exchequer George Osborne.

On the Markets | U.K. government bonds had their worst month in over a year in April as the Brexit delay tempered demand for the safety of government debt. The trend could continue in May with the central bank expected to give a hawkish signal Thursday and pushing up bond yields further. 

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To contact the editor responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net, Adam Blenford

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