May Secures Temporary Cease-Fire in U.K. Tory-Brexit Infighting

(Bloomberg) -- Theresa May seemed to have secured a temporary reprieve from the infighting that's dogged her premiership, with both the pro- and anti-EU factions of her Conservative Party thinking they could see an advantage in the Brexit strategy she's set out.

May's speech on Friday described a position in which Britain would leave the European Union's single market and customs union but stay closely aligned in many areas, keeping EU regulations. In the future, she told the BBC, Parliament would be able to decide whether to diverge, “taking a decision and balancing the interests between keeping the same rule or changing for the future.”

Jacob Rees-Mogg, chairman of the European Research Group, which favors a hard Brexit, called the proposal “sensible, pragmatic and generous.” Those around him believe that the important thing is to keep the option of divergence on the table, so that they can exploit it in the future.

Normally, such a welcome would be enough to upset those in the Tory Party who want to stay close to the EU. But they view the option of divergence as a safe concession because Parliament would need to vote to diverge. Instead of attacking the speech, they welcomed May's statement that Brexit would involve compromises.

‘Dose of Realism'

“That was a very welcome dose of realism,” Nicky Morgan, chairwoman of Parliament's Treasury Committee, told the BBC on Sunday. “We can get away from pretending that things are going to stay the same, that we can have the exact same benefits and be honest with ourselves.”

Her fellow Tory, Sarah Wollaston, agreed. “We need to give the prime minister breathing space,” she said on ITV. “Both sides see something that they like.”

May will try to get the focus away from Brexit on Monday with a speech on housing. She's been determined that her premiership should be about helping people in their everyday lives -- but her attention keeps being dragged back to Brexit.

The peace in her party may be short-lived. Wollaston and others were clear that they weren't yet going to back away from supporting an amendment to the Trade Bill, currently going through Parliament, that will urge the government to seek a customs union with the EU. Wollaston said her position would be based on whether it looked like May might get what she is seeking.

Functioning Business

“A lot depends on how the EU responds,” she said. For Wollaston, the key issue is whether business would be able to function. “It's about whether we have some form of partnership so that we have frictionless trade at our borders,” she said.

The answer could come this week, when European Council President Donald Tusk circulates draft EU negotiating guidelines for its talks on the future relationship with the U.K. The EU has previously rejected what it describes as a “cherry-picking” approach by Britain, which would keep the best bits of EU membership and dump the rest.

Even May's allies acknowledge there's a danger here. Cabinet Office Minister David Lidington described May's speech as “an ambitious opening bid for what will be a complicated set of negotiations.” He acknowledged that she might bring back less than she wanted.

Melodrama or Running Sore: Does Brexit Imperil Ireland's Peace?

In a sign of how difficult negotiations will be, Ireland's Deputy Prime Minister Simon Coveney expressed frustration that May hadn't offered a new solution to the problem of his country's border with the U.K. “She hasn't really gone into any more detail than we've already heard,” he said on the “Andrew Marr Show” on the BBC.

May's own intervention on Sunday was via an interview recorded on Friday, in which she went over the ground of her speech. She emphasized that the U.K. isn't looking for a “passporting” deal to let British financial-service companies work in the EU.

“We'd have to abide by the rules that were being set elsewhere,” she told Marr. Instead, May said, she wanted financial services to be covered in the free-trade agreement she's proposing with the EU. Chancellor of the Exchequer Philip Hammond is due to give a speech on that this week.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Ros Krasny, Mark Niquette

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