October Is ‘Moment of Truth’ for Brexit, EU’s Barnier Tells U.K.

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The U.K. and the European Union signaled their readiness to work to break the deadlock in Brexit talks as Prime Minister Theresa May prepared for a crucial summit aiming to persuade EU leaders to back her plans.

The bloc's chief Brexit negotiator, Michel Barnier, repeated his offer to re-write his blueprint for avoiding a hard border between the U.K. and Ireland -- the issue that has held up progress in negotiations since March. The British premier initially rejected Barnier's original plan as “unacceptable” because it involved keeping Northern Ireland in the EU's customs territory.

Over dinner with her fellow EU leaders in Salzburg, Austria, on Wednesday, May will hammer home her message that carving out a piece of U.K. territory will never be an option, but she'll insist she's committed to reaching an agreement if better terms are proposed, according to a senior U.K. official.

“Our proposal for the backstop for Ireland and Northern Ireland has been on the table since February,” Barnier told reporters in Brussels on Tuesday. “We are ready to improve this proposal.”

The positive signs on resolving the Irish border question emerged as time runs out for the two sides to finalize the terms of the U.K.'s divorce.

For her part, May wrote an editorial in Die Wielt, a German newspaper: “To come to a successful conclusion, just as the U.K. has evolved its position, the EU will need to do the same. Neither side can demand the unacceptable of the other.”

Barnier warned May that substantial progress on the U.K.'s orderly withdrawal from the bloc is needed next month if a deal is to be struck in time for the departure in March.

“October will be the moment of truth,” Barnier said. “It's then we will see whether the agreement we're hoping for will be within our grasp.”

At the gathering in Salzburg, leaders are expected to discuss holding an extra summit in November to sign off on the Brexit agreement. Both sides admit they won't hit their original deadline -- their meeting in mid-October -- but say time remains tight to allow approval by both the British and European parliaments.

EU officials say the U.K. will have to return to the negotiating table between the Conservative Party conference in Birmingham that winds up Oct. 3 and the summit in Brussels less than three weeks later. They say the U.K. needs to compromise on the major obstacle to a deal -- how to keep an invisible Irish border after Brexit and there has barely been any progress on that since the start of the year.

As well as the Irish question, the two sides need to converge on an outline for future economic, trade and security cooperation. That will be the main topic of debate when the EU's 27 other leaders meet without May over lunch in Salzburg on Thursday.

May wants to stay close to the EU for trade in goods but to go it alone on services. The EU says that won't work because its single market is indivisible.

Brexit is being done in two stages: First the divorce deal, which will enable a 21-month transition phase when the U.K. leaves the EU in March 2019; then a full negotiation over future ties.

While the November deadline is now an open secret in Brussels, the EU wants to keep the pressure on the U.K. throughout October.

EU President Donald Tusk, who chairs summits, said in a statement Tuesday that leaders at Salzburg will discuss how to organize "the final phase of the Brexit talks, including the possibility of calling another European Council in November.”

Irish Foreign Minister Simon Coveney said he wanted to see the U.K. step up their engagement in negotiations over the border to achieve an agreement in October.

“Some people seem to be suggesting that we can just move past the leaders' meeting in October and into November,” Coveney told reporters in Brussels after meeting Barnier. “That is not the view of Ireland. We want to see substantial progress.”

To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net;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