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finance

May seeks to overcome deadlock after Brexit setback


Theresa May will on Wednesday night seek to overcome the deadlock in Brexit negotiations as both the UK and the EU eye a new initiative: keeping Britain in a transition that will retain many of the aspects of membership after 2020.

The UK prime minister will address other EU leaders at a Brussels summit as both sides try to put talks back on track so that a breakthrough can be reached in the next few weeks.

One possible avenue for a compromise is the idea of extending the UK’s post-Brexit transition deal — currently due to expire in December 2020 — for a further year until the end of 2021.

Prolonging Britain’s membership of the bloc’s single market and customs union could help resolve an impasse over Northern Ireland. But it would leave the UK with no say in Brussels over policy for a longer period — as well as continued free movement and budget contributions.

Mrs May is likely to tell the rest of the bloc that the UK is getting nearer to a Brexit deal. Her spokesman said: “We are moving close to one another.”

But, speaking ahead of the summit dinner, a senior EU diplomat said: “What will not happen this evening is a negotiation. [We] will not negotiate in an improvised way.”

The diplomat added that there were “still several weeks of space . . . to find this agreement”, cautioning that “evidently the calendar is getting tighter. The work has to intensify because the stakes are high. No one in Europe wants a no-deal.”

German chancellor Angela Merkel said on Wednesday: “There is still a chance that we can achieve a good and viable withdrawal treaty on time.” But she added that the bloc had to prepare “for every scenario, including the possibility that the UK will leave the EU without an agreement”.

Mrs May pulled the plug on talks on Sunday after her cabinet warned her that it was not ready to sign up to a draft withdrawal treaty being prepared in Brussels by officials from both sides.

Eurosceptic ministers, including the increasingly influential pro-Brexit attorney-general Geoffrey Cox, told her on a conference call that day that they could not accept a proposed deal that could end up with Northern Ireland being split from the rest of the UK.

The impasse dismayed British officials, who had been told to prepare the ground for a deal on the withdrawal treaty at this week’s EU summit. “They were spitting blood,” said one person close to the British team.

But Mrs May has told other European leaders, including Ms Merkel and French president Emmanuel Macron, she needs more time to bring her cabinet and Eurosceptic MPs around.

She is not expected to put forward any new proposals at this week’s summit, but she has told fellow ministers not to be “downhearted” if fellow European leaders do not set a date for a November summit.

British ministers increasingly talk about the real deadline for a Brexit deal shifting to the European Council meeting in December, although the EU is prepared to move in November if there is a breakthrough in negotiations.

In a sign of the constraints on the prime minister, at a cabinet meeting this week Mr Cox spelt out Eurosceptic objections to any separate treatment of Northern Ireland in a Brexit deal — the heart of EU attempts to avoid a hard border on the island.

The EU’s “backstop” proposals, which Mrs May has denounced as unacceptable, would in effect split Northern Ireland from the rest of the UK by keeping the province in the EU’s customs union and single market territory.

“[Mr Cox] said that we would be legally signing up to a deal that would split the union,” said one official briefed on the cabinet discussions. “The cabinet agreed it would only approve any deal after a full assessment of its legal ramifications by Geoffrey.”

Mrs May’s allies also confirmed that Michel Barnier, the EU’s chief negotiator, had been “kicking the idea around” of an extended transition to defuse some of the problems over the backstop — now the most difficult issue in the negotiations.

Lengthening the transition past 2020 would give the EU and UK more time to negotiate a free trade deal — which Mrs May wants to produce “frictionless trade” — to obviate the need to trigger such a backstop.

“What Michel Barnier has said now is . . . ‘let’s give more time if necessary to negotiating a future relationship that makes the backstop unnecessary and irrelevant’,” Simon Coveney, Ireland’s deputy prime minister, told RTE, Ireland’s national broadcaster.

Under Mr Barnier’s proposal, both sides would commit to a free trade deal by the end of 2021, with various checks and review points along the way to ensure that they were negotiating seriously.

Only if a trade deal failed to materialise would the backstop come into action.

But the idea of lengthening the transition is fraught with problems for Mrs May. It would mean Britain remaining a member of the EU in all but name until close to the next general election, which must take place by mid-2022. Tory Eurosceptics fear that Brexit could be reopened at that election, unless a clean break had already taken place.

The senior EU diplomat added that lengthening the transition period was part of a package rather than a solution in its own right:

“It was evoked in the negotiations at the point where it looked like they were on the point of achieving a result,” the diplomat said. “We asked ourselves: ‘Is there time to negotiate a customs union between March 2019 and end 2020?’ It’s not impossible but it’s not much time. But the other solutions [envisaged as part of the overall deal on the withdrawal agreement] did not work.”

The diplomat also argued there had to be an end date to the transition, since it was not legally possible to extend it indefinitely.

“If we go into 2021 then we are in the next multiannual budget. So we have to ask ourselves the question of the contribution of the UK to this next multiannual budget,” the diplomat said. “I don’t say that to dissuade anyone from extending the transition, but that it’s something that needs to be thought about.”

Additional reporting by Guy Chazan in Berlin



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