U.K.'s Theresa May to Consider Delay to Brexit Date

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Theresa May is considering a plan to delay Brexit and stop the U.K. leaving the European Union with no deal next month, according to people familiar with the situation.

The prime minister is expected to allow her Cabinet to discuss extending the deadline beyond March 29 at a crunch meeting on Tuesday, one of the people said. She would then reveal the Cabinet's conclusions in an announcement to Parliament later in the day.

May is likely to carry on trying to get a deal done on time. But if no agreement is reached in the next month, a delay of some kind would be needed.

Allowing the U.K.'s scheduled exit from the EU to be postponed would be a huge political gamble. On one hand, it would avert mass resignations from pro-EU ministers in May's team, and potentially a defeat in Parliament this week. But it would also risk a destabilizing backlash from euroskeptic Conservatives.

A delay would be a major climbdown for the British leader, who has spent the past two years insisting that the U.K. will leave the EU on schedule. It comes within hours of another major U-turn: that of opposition Labour leader Jeremy Corbyn deciding to back a second Brexit referendum.

Together, the announcements will make pro-Brexit politicians fear that the divorce could eventually be abandoned. May could even use that fear to her advantage, to persuade them to back her deal rather than risk seeing Brexit reversed.

The pound strengthened. Investors and businesses want to avoid a crash-out exit and most welcome more time to prepare, or even to rethink the divorce.

Read More: What a No-Deal Brexit Would Mean for Business, Food and Finance

In just over a month, the U.K. is meant to be departing the union it's belonged to for 40 years but the outlook has never looked more uncertain. May's hands are increasingly tied by an unpopular divorce deal she sealed with the EU but that Parliament has rejected by a landslide. Brexit has proved to be such a divisive issue that both mainstream parties have suffered defections.

Delaying Brexit has the potential to split May's Cabinet and her ruling party, triggering a rebellion from Brexit-supporting Tories who might even try to bring down her government. In an effort to minimize the revolt, May could argue she is not ruling out a no-deal Brexit for all time. She could say it's simply not an option for March 29.

But May's allies accept she has run out of time and must now choose between angering her pro-Brexit colleagues, and alienating as many as 20 pro-European ministers who are threatening to quit to vote against her and stop a no-deal exit from the EU in Parliament on Wednesday.

Under the premier's plan this week:

• May will chair a Cabinet discussion on extending Brexit at 9:30 a.m. in London on Tuesday
• May will update Parliament on the Cabinet's decision after 12:30 p.m. on Tuesday
• The government will propose motion on the Brexit state-of-play by Tuesday night
• The House of Commons will debate and vote on May's Brexit motion on Wednesday

A political bust-up is certain to follow.

If she doesn't find a way to remove the threat of a no-deal departure next month, May is likely to suffer a spate of resignations. Cabinet ministers including Pensions Secretary Amber Rudd and Business Secretary David Gauke have signaled they will quit rather than be part of a government that takes Britain out of the EU with no deal.

If she does back a delay, May's pro-Brexit colleagues will accuse her of betrayal and could even support a vote of no confidence in the government -- potentially triggering a general election.

May returned on Monday night from an EU summit in Egypt where one EU leader after another asked her whether she would delay Brexit. EU Council President Donald Tusk said it was the "rational" thing to do.

May would have to ask the EU for an extension, and the bloc would probably say yes. What's less certain is whether they would agree to a short delay, or force her into a longer one that would be even more politically toxic at home.

--With assistance from Benjamin Purvis.

To contact the reporter on this story: Tim Ross in Sharm el Sheikh, Egypt at tross54@bloomberg.net

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net;Emma Ross-Thomas at erossthomas@bloomberg.net

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