Eyes on Tuesday's U.K. Cabinet Meeting for Brexit Breakthrough

(Bloomberg) -- Two weeks of strategic silence on the progress of Brexit talks appears set to end this week, amid signs U.K. and European Union negotiators are finally coming close to breaking the deadlock.

Prime Minister Theresa May's Cabinet will discuss Brexit on Tuesday, and there were suggestions this weekend by members of her Conservative Party that she's preparing to give ministers an ultimatum to back a draft deal. Her spokesman, though, played down a Sunday Times report that an agreement with the EU was done.

The key sticking point in talks remains how to avoid customs checks at the post-Brexit border between Northern Ireland and the Irish Republic without putting up new barriers between Northern Ireland and the British mainland.

Neither side has reported in any detail about what's being done to resolve the issue since May updated Parliament on Oct. 22.

But according to the Sunday Times, May's officials have secured concessions from the EU on the so-called Irish backstop that could help her get a deal through Parliament. Specifically, the EU's agreed to let her keep all of the U.K., not just Northern Ireland, in a customs union with the bloc until a broader trade deal is agreed, the newspaper reported.

‘Speculation'

A Downing Street spokesman said Sunday the report was “speculation” and that negotiations with the EU are ongoing, although he reiterated the government's line that the withdrawal agreement is 95 percent complete and that it's making progress on the future relationship.

Communities Secretary James Brokenshire also seemed to play down talk that a deal was done, telling the BBC's “The Andrew Marr Show” Sunday that resolving the Irish border “remains our focus and attention in getting that deal.”

But during a visit to Dublin last week, May's de facto deputy, David Lidington, said the U.K. and the EU are “certainly very close to resolving” the border issue. He said he wouldn't predict the timing of a deal, but he pointed out that a Cabinet meeting could be called at any time.

Read more: Why Ireland's Border Is Brexit's Intractable Puzzle: QuickTake

The Times also said May's on course to get an agreement on a future economic partnership that will let Britain keep open the prospect of a similar free-trade accord to the one Canada has with the EU -- a move it said could help persuade the euroskeptic Tories to back the deal. The newspaper also said May wants to make enough progress this week to persuade the EU to call a special summit in November to sign off on the final details.

‘Microscopic Detail'

The Guardian cited unidentified EU officials saying the chances of May reaching a deal on the Irish border that she can sell to Cabinet and Parliament were only “50-50.”

“The Cabinet must not be bounced -- again! -- into part-informed support for an untenable policy,” prominent Brexiteer Steve Baker said on Twitter, referring to the July Cabinet meeting during which May got ministers to sign off on her negotiating strategy. “On the back benches, there will be no escaping the need to read and understand any proposal in microscopic detail.”

The Telegraph reported late Sunday that Brexit Secretary Dominic Raab had demanded Britain retain the right to pull out of the Irish backstop after just three months -- a pitch he made to “stunned” Irish officials days before Lidington's comments in Dublin.

The crucial test inside Cabinet will be if May can persuade Attorney General Geoffrey Cox to back her plan. If he does, other senior ministers worried about her proposals will also get behind the deal, a person familiar with the matter said.

Still, it's not only ministers May has to worry about. Some of Britain's biggest corporate names said over the weekend they'd had enough of the government's handling of the negotiations.

More than 70 business leaders, including lastminute.com founder Martha Lane Fox and former J. Sainsbury Plc chief Justin King -- signed a letter arguing that both the government's current plans for Brexit, and a no-deal Brexit, would be bad for companies and jobs.

And with the sense that Brexit is moving into a final endgame, Remain campaigners are also stepping up efforts to reverse the decision, or at least to force a second referendum on the terms of the U.K.'s departure from the European Union.

Their efforts were likely bolstered again on Sunday when Arron Banks, the insurance businessman whose millions of pounds of donations to a pro-Brexit campaign are being investigated by police, gave a typically combative interview to “The Andrew Marr Show.”

Read more: Arron Banks Says Brexit Donations Came From U.K. Businesses

Banks once again denied Russian involvement in the campaigns and said funding came from his U.K. businesses -- and he stuck to his line that he's the victim of efforts aimed at “undermining the Brexit result” by a “group of vicious MPs.”

But while it's awkward for the government and May, there's little chance that any evidence of meddling or other foul play would be enough to derail Brexit. Not with a deal apparently so close at hand.

To contact the reporter on this story: Stuart Biggs in London at sbiggs3@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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