Brexit Bulletin: The Showdown Is Set for June

309 Days to Go

Today in Brexit: Theresa May will put her authority to the test next month, bringing her key Brexit legislation back to Parliament before a crunch EU summit.

Prime Minister Theresa May is delaying no more. In June she will put her landmark piece of Brexit legislation to Parliament in a showdown between the warring factions of her party that will test whether she can deliver the divorce she has promised – and stay in power.

In another high stakes move, the prime minister is planning to force her divided Cabinet to decide in June on what kind of customs setup it wants to pursue. Both the European Union and Brexit hardliners have been pushing May for clarity on her Brexit strategy in time for a summit at the end of June, and she’s finally decided to oblige.

The EU withdrawal bill was heavily amended in the House of Lords, where anti-Brexit peers inserted clauses aimed at maintaining closer ties to the bloc. They voted for the U.K. to stay in the single market and also in the customs union. They removed the exit date of March 29, 2019, gave Parliament a greater say on proceedings and inserted an amendment to avoid a no-deal split.

#lazy-img-328015455:before{padding-top:73.81818181818181%;}Theresa MayPhotographer: Simon Dawson/Bloomberg

Now pro-EU rebels in the Tory party will have to decide which of those amendments they fight to keep as the government orders them to vote to strip them out.

Pro-Brexit hardliners reckon May can defeat the rebels, Rob Hutton reports. She may be calculating that there’s not a majority in the House of Commons to stay in the single market – the Labour Party leadership doesn’t support it, at least not yet – and the Lords’ amendment on staying in the customs union was so weakly worded that it wouldn’t force the government to do anything. Perhaps she can live with some of the other amendments, even if they tie her hands at the negotiating table.

The Times reports that the U.K. will ask Brussels for a second transition period that would cover trade, customs and industrial goods and last until 2023, to prevent a hard border in Ireland. She may be betting this will be enough to convince some pro-EU rebels to stay with her, at least for now, in the hope that the second transition turns out to the kind of permanent state of quasi-membership that the Brexiters most fear.

The EU meanwhile, looks on. It has made clear it’s not interested in piecemeal transitions; it’s all or nothing. It has long flagged the June 28 summit as a key date where it could change its negotiating position if the U.K.’s red lines move. But more pressingly, it’s demanded progress on the Irish issue. And in the latest round of talks this week, May’s new Irish proposal has yet to make an appearance.

Today’s Must-ReadsA Brexit minister admitted that Britain will be on the hook for a £39 billion exit payment whether or not a trade deal is signed. May has insisted it’s all part of the same package, though the EU has always said the bill has nothing to do with future trade.May will ask the EU for a second transition period lasting to 2023 to avoid a hard border in Ireland, the Times reports. The U.K. would follow EU rules on customs, trade and industrial goods until a new customs setup is ready in 2024 that will ensure frictionless border trade, the paper says.Brexit in Brief

The Costs of Max Fac | The customs setup favored by Brexit supporters would cost businesses as much as £20 billion a year, according to estimates by the U.K. tax and customs authority. By contrast, the system favored by May, a more complicated setup that would keep closer ties to the bloc, would cost no more than £3.4 billion a year. The government said the forecast was speculation, but the eye-watering figure won’t help the Brexit hardliners’ cause.

Imagining the Endgame | Ivan Rogers, the U.K.’s former top diplomat in Brussels, says the final Brexit outcome will depend on whether the EU will accept Britain remaining a member of the customs union, with a high level of regulatory alignment and quasi-membership of the single market — but without free movement of people. “The EU faces the decision as to whether this is an unacceptable option sundering indivisible freedoms and offering something too close to membership advantages to a non-member,” he told the Telegraph. “Or whether it’s rather a good deal for the EU with a major strategic partner.”

Cummings’ War Cry | Dominic Cummings, the brains behind the Vote Leave campaign, has warned that Brexiteers will be blamed for the “train wreck” Brexit that May will deliver and calls on them to “change the political landscape” before the election in 2022. He slams the “May/Hammond brand of stagnation punctuated by rubbish crisis management” and accuses the government of trying to keep Britain tied to the EU and its courts. May is counting on euroskeptics not to follow through on their threats, and he says on that point she may be right. The real risk he sees? Jeremy Corbyn winning the next election.

I Want My Money Back | In the latest threat in the saga over how much access the U.K. will maintain in the EU’s Galileo satellite project after Brexit, the Telegraph and Times report that Britain will demand the bloc repays the £1 billion it has already invested in the project. The Brexit Department is due to publish a paper on Thursday setting out its position. The Times also says France, Spain and the Netherlands are among countries unhappy with the way Britain has been treated.

New Germans | Brexit has triggered an unprecedented wave of British applications for German citizenship. In 2016 and 2017, there were 10,358 successful applications, more than twice as many as the period from 2000 to 2015. In 2017, applications from Britons topped those of Poles, Italians and Romanians.

#lazy-img-328003368:before{padding-top:62.41666666666668%;}Federal Statistics Office

Data Rules | The U.K. will remain aligned with EU data rules after Brexit as it seeks to maintain close cooperation in the interests of business and security, it said in a presentation on Wednesday. The U.K. wants an agreement that goes beyond the EU’s standard adequacy decisions, which are unilateral.

Read more: Giles Turner runs through the issue of data sharing and data protection in a Bloomberg QuickTake.

Boris in Chile | Chile is keen to make sure a new trade deal with the U.K. is ready to go as soon as Brexit happens so there’s no “vacuum” when the U.K. drops out of the bloc’s trade agreements with third countries. Chilean Foreign Minister Roberto Ampuero, speaking alongside Boris Johnson, didn’t specify whether the terms would be the same as the existing deal or whether Chile, a free-trade leader in the region, would seek better terms. Johnson also called for a “welcoming approach” to immigration.

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