May tames divided Tories with soft Brexit

It’s a victory for May, long written off as a weak and indecisive leader with no authority, and a win for business

By BLOOMBERG

LONDON • UK Prime Minister (PM) Theresa May imposed her vision of a soft Brexit on her divided Cabinet, pleasing business with a plan to keep close trade ties to the European Union (EU) and telling insolent ministers to get behind her or resign.

Her plan, which would set up a free-trade area with the EU and mirror EU rules for goods and food, goes against much of what pro-Brexit Cabinet ministers have long demanded. But after months of threatened resignations or leadership challenges, none have so far materialised.

It’s a victory for May, long written off as a weak and indecisive leader with no authority, and a win for business, which has stepped up its lobbying efforts in recent weeks, with household names warning of the dire consequences of a messy divorce. Business lobbies welcomed her plan.

So did chief EU negotiator Michel Barnier, though he still needs to look at the details, many of which he won’t like.

There were messages in the Cabinet’s statement aimed directly at unblocking talks, which have been all but stalled since March and are meant to be wrapped up in just 15 weeks. May said she expects the EU to engage with her proposal.

“From the soundings I’ve had so far, there is a willingness to sit down to talk about this,” she told the BBC in an interview on Saturday.

The PM is not out of the woods. Still, even Jacob Rees-Mogg, the outspoken Brexit hardliner who commands enough support in Parliament to trigger a leadership challenge, reserved judgement.

Nigel Evans, a lawmaker who’s taken hardline Brexit positions as recently as February, said he could back May’s plan.

“I, as a Brexiteer, am happy and content to back the PM,” Evans told reporters after May’s chief of staff briefed lawmakers on the proposals.

May’s plan keeps the UK tied to EU rules for goods, but able to diverge on services — and the Cabinet acknowledges that will mean financial services won’t have the same access as before. It appears to have dropped an earlier proposal for “mutual recognition” of regulation for financial services.

The EU has objected already to partial access to its single market, saying the UK can’t pick and choose the bits it wants. It’s all or nothing. May’s plan also leaves the door open to some flexibility on EU immigration but stops far short of the EU’s demand that free movement of people is a non-negotiable aspect of single market membership. May told the BBC it was still to be decided whether EU citizens would get preferential treatment, leaving the door open for more concessions as she goes into the next stage of negotiations.

Her proposal on goods also aims to solve the problem of the Irish border, which remains the major sticking point in talks with Brussels. The EU demands a backstop, or guarantee, that no hard border will emerge on the island after the divorce but neither side can agree on how that last-resort clause should be worded. The Cabinet said the new plan means the backstop will never have to be brought into effect, though the UK will sign the legal text “nonetheless”. This, the Cabinet said, will help unblock negotiations.

Irish Foreign Minister Simon Coveney on Saturday said the UK text “needs and deserves detailed consideration”.

If May keeps her Cabinet ministers and lawmakers on board over the summer and into the final stage of talks, then a path appears to be opening up to an orderly divorce. The final trade deal doesn’t need to be agreed until after Brexit day next year.

All the two sides need to settle now is to a legally binding divorce deal — which is nearly there apart from the Irish border issue — and then a non-binding political statement setting out what the two sides want the future trade deal to look like. A vote in Parliament this autumn will be May’s last big test of her Brexit plan and that’s an opportunity for pro-Brexit opponents to try to bring her down.

“The EU will not go along with this, but I’m interested to see if they string it out so as to get the withdrawal agreement over the line,” Sam Lowe of the Centre for European Reform, said.

BuzzFeed reported that the EU would reject it, even as public statements so far reserve judgement.

The country’s main business lobby the Confederation of British Industry, said the plan was a “genuine confidence boost” and appeared to be based on evidence companies have put forward. Other industry groups agreed.