May Returns to Face Brexit Crisis as Leadership Pressure Grows

(Bloomberg) --

Theresa May is fighting to keep her job so she can complete the defining task of her premiership and take the U.K. out of the European Union -- but her hopes of success now rest with her arch rival Jeremy Corbyn.

Senior officials in the prime minister's team believe the only realistic chance of a Brexit deal passing a vote in Parliament is if the opposition Labour Party leader decides -- preferably this week -- that settling the issue is in his interests. Unlike May, Corbyn seems in no hurry to get Brexit done, people familiar with the matter said.

Talks between Labour and Conservative officials are set to resume Tuesday after members of Parliament return to London from their Easter break. If a deal can't be sealed before European Parliament elections are due to be held May 23, the prime minister's allies fear she will lose her chance and could be forced out, according to the people, who asked not to be named.

The premier is facing renewed demands to stand down from grassroots Conservative Party activists, while a number of her colleagues in Parliament want her to resign. The grievances from pro-Brexit Tories center on May's failure to complete the U.K.'s divorce from the EU and her decision to open talks with the socialist Corbyn -- their political enemy -- in an attempt to reach a cross-party consensus.

Delay, Delay

Britain was due to leave the EU on March 29 but the divorce has been postponed twice after Parliament repeatedly rejected the terms May negotiated. The country will now not withdraw from the bloc potentially until Oct. 31, prolonging the political uncertainty, to the dismay of business leaders.

According to one of May's senior allies, the crucial question for the premier is whether she can sell a compromise on membership of a customs union to her own party, despite her repeated insistence that remaining in the EU tariff regime would be a bad deal. The issue is a live one as customs union membership is a key demand of the Labour team in the cross-party talks.

For Corbyn, the key issue is whether he can get away without securing another referendum, when many Labour members want the public to have the chance to vote on whether to accept the terms of the U.K.'s divorce.

Tories ‘Despair'

The backdrop to the cross-party negotiations is May's own precarious position as party leader and prime minister. She has already promised to stand down after the exit deal is agreed to make way for a new leader to take charge of the second phase of the Brexit process: negotiating the future partnership with the EU.

May is determined to see the divorce through to its conclusion, her advisers say. But for many Conservatives she's already compromised too far and even the prime minister's closest allies recognize her fate is no longer entirely in her hands.

On Monday, it emerged that local Conservative Party association bosses will hold a non-binding vote on May's leadership at a special meeting. Dinah Glover, chairwoman of the London East Area Conservatives, said there was “despair in the party.” She told the BBC: “I'm afraid the prime minister is conducting negotiations in such a way that the party does not approve.”

No date has been announced for the vote, in which the party's 800 highest-ranking officers will take part.

May survived one attempt to oust her as Tory leader in December. Another formal vote of no confidence among Conservative members of Parliament can't be held until the end of this year, under party rules. There have been reports that some Conservatives are considering whether to change those rules to allow another vote to be held sooner.

May's team calculates that while leadership rivals are preparing themselves for a contest to succeed her, potential rivals inside the cabinet do not want to take over until after the U.K. has left the EU.

While that could give May some breathing space, two crucial sets of elections will increase the pressure on her again. On May 2, local government elections are being held in England, and three weeks later, the U.K. is due to hold elections for the European Parliament. Nigel Farage's new Brexit Party is already leading opinion polls, to the cost of the Tories.

May's allies fear that a victory for the euro-skeptic Farage will push many moderate Conservatives into adopting a more hard-line stance. That would ruin May's hopes of persuading them to vote for her withdrawal agreement in the Commons.

To contact the reporter on this story: Tim Ross in London at tross54@bloomberg.net

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Robert Jameson

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