Rees-Mogg Delivers Ultimatum Over May's Post-Brexit Customs Plan

(Bloomberg) -- He insists it's neither a threat nor an ultimatum, but Conservative lawmaker Jacob Rees-Mogg's latest challenge to Prime Minister Theresa May over the type of Brexit to pursue feels a lot like both.

Rees-Mogg effectively warned that his group of Euroskeptic lawmakers would withdraw its support if May goes with her preferred so-called customs partnership with the European Union after Brexit. It would “leave us de facto in the customs union and the single market” Rees-Mogg told the BBC, reneging on the referendum vote to leave the bloc. Privately, one of those involved with Rees-Mogg's group said it was a line the government couldn't cross.

As Rees-Mogg pointed out, the EU is also doubtful about whether a customs partnership, in which the U.K. would collect the EU's tariffs and refund exempt business later, could work. But the fight again raises the question of how much power Rees-Mogg's European Research Group has over May. Or specifically, whether the 62 lawmakers he can marshal are enough to topple her.

Why Is Rees-Mogg Being so Reasonable on Brexit Deal? Simple Math

Under Conservative Party rules, it takes 48 signatures to trigger a confidence vote in May's leadership. But what happens then? There are 316 Conservative lawmakers, so if only 62 vote against May, she wins easily. Such an outcome is not impossible -- she's held on even after last year's disastrous election gamble largely because there's no consensus about who should replace her.

What game are they playing at?

That could be why the Telegraph newspaper reported that the ERG's latest threat is intended not at securing a confidence vote, but to withdraw support for her legislative program -- effectively bringing the government to a halt. Given May's lack of parliamentary majority, 62 votes is more than enough.

But the strategy is not without danger for Brexiters. If May concludes she can't get her legislation through, she could be forced to ask the EU for more time, delaying the divorce. She could also call an election, potentially letting in a Labour government that may then seek the sort of Brexit-in-name-only that Rees-Mogg fears.

May could even decide to stop trying to govern with the support of this band of euroskeptics, and instead go for a Brexit option that seems likely to command a majority in the House of Commons. Jeremy Corbyn's Labour has said it backs staying in a customs union -- the premier could ask for its help to do so.

The latter still looks unlikely. The view of May's chief of staff, Gavin Barwell, is that the opposition would ultimately find an excuse to vote against the government to try to bring it down. His goal is to find a solution that unites the Tories.

At the moment, that seems as far away as ever. One pro-EU Conservative lawmaker observed glumly this week that he couldn't see a parliamentary majority for any of the options. And that could mean a “no deal” Brexit -- something that Rees-Mogg says he'd be more than happy with.

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, Stuart Biggs, Emma Ross-Thomas

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