Theresa May Gives Up on Cross-Party Talks to Fix Brexit, Sources Say

(Bloomberg) --

Theresa May will return to Parliament on Monday having briefed her Cabinet on Sunday evening that there was little prospect of cross-party Brexit talks succeeding.

It will be her fourth appearance in the House of Commons chamber in eight days. Last week she saw the deal that she'd negotiated with the European Union overwhelmingly rejected. The following day she survived a vote of confidence in her government. Since then, she's invited lawmakers from all sides to come and talk about alternative Brexit paths.

But in a conference call with her most senior ministers, May said those discussions have yielded little. Instead, according to two people who were on the call, she said she would seek changes to the Irish backstop section of the deal she's negotiated with the EU. The goal would be to secure enough to get pro-Brexit members of her Conservative Party and her sometime allies in the Democratic Unionist Party back on her side.

The problem is that the EU has repeatedly ruled out reopening the divorce deal it took 18 months to negotiate. May's stance is bad news for investors who've been hoping that cross-party talks would yield a Brexit policy that keeps closer ties to the bloc.

May risks losing control of the situation. On Monday a group of veteran lawmakers is planning to present amendments that could eventually force her into renegotiating Brexit and even delaying the exit day.

How Parliament Can Seize Control of Brexit: A Step-by-Step Guide

Can't Trust Labour

The consensus on the Cabinet call was that the things the opposition Labour Party has publicly asked for, including maintaining a customs union with the EU, would split the Conservative Party if May agreed to them.

Further, Labour leader Jeremy Corbyn has refused to take part in talks unless May rules out a no-deal Brexit, and continues to wield the threat of a confidence vote. That's left the government doubtful that the party could be counted on.

An extension of the Article 50 process governing Britain's departure from the EU wasn't discussed on the call, according to one of the people.

But May is only one player in deciding what happens next. Monday will also see moves by members of parliament to seize control of the Brexit process. Former Attorney General Dominic Grieve is drafting a temporary amendment to the standing orders of the House of Commons that would give time to a backbench motion on what should happen next. Another former minister, Nick Boles, is proposing that this slot be used to pass a bill that would require the government to extend Article 50 if no deal could be reached.

Although the U.K. could unilaterally withdraw Article 50, any extension would require the agreement of the EU. European officials are discussing the idea, but are split about how long a delay to offer, with some pushing for an extension of as much as a year.

While some countries think the EU should offer Britain a generous period to negotiate a deal that will win the backing of Parliament, possibly after a second referendum, others oppose a postponement of any sort and want pressure to be put on the U.K. to accept a deal as soon as possible.

Labour Gambit

May was 116 votes short of passing her deal last week. With most of the small opposition parties implacably opposed to Brexit, she has only two pools of votes to go to: the pro-Brexit alliance of Conservatives and Northern Ireland's Democratic Unionist Party, or Labour.

The official Labour position is to ask for a customs union with the EU. But Cabinet members fear that even if May offered this, Labour would be more interested in forging an alliance with outraged pro-Brexit Tories to force an election than it would be in voting through her deal. Corbyn's spokesman refused to rule that out last week. To break off significant numbers of Labour MPs from their leader, May would have to promise another Brexit referendum, something that would almost certainly split her party.

That leaves pro-Brexit Tories. Here the Boles plan to rule out a no-deal Brexit could actually help May. Brexit backers prefer a no-deal departure to her plan. If it became clear that no-deal were no longer an option, they might well prefer her deal to the risk of no Brexit.

Irish Question

Trade Secretary Liam Fox told the BBC on Sunday that a no-deal Brexit was “a real possibility,” and urged countries to engage with the U.K. to avert it. His preferred option is to reopen talks with the European Union about ways to solve the Irish border question that don't involve the current backstop. But Irish Foreign Minister Simon Coveney said Saturday that his country's commitment to the current agreement is “absolute.”

The Telegraph reported on Sunday evening that May was considering rewriting the Good Friday Agreement, which delivered peace in Northern Ireland, to placate her own side. This would be a hard sell in Ireland, which would have to agree.

German Chancellor Angela Merkel pledged Saturday to work until the “last day” to ensure an orderly Brexit, and signaled that responsibility for a successful withdrawal doesn't lie solely with the U.K.

Addressing a regional party event, Merkel framed Brexit as an historic test of the EU's ability to withstand crises. “We also have a responsibility to shape this separation process in a responsible way, so that people don't look back in 50 years, shaking their heads, and say why weren't we in a position to make a compromise?” Merkel said in Rostock, Germany.

--With assistance from Tim Ross and Jessica Shankleman.

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

To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Ros Krasny, Tony Czuczka

©2019 Bloomberg L.P.