Newsdeck

EU and U.K. Fear Deal Is Dying as Talks Stall: Brexit Update

By Bloomberg 16 October 2019
Caption
A pedestrian walks up a staircase on the southern bank of the River Thames with Houses of Parliament seen in the background in London on September 2, 2019. Photographer: Tolga Akmen/AFP/Getty Images

British and European Union officials are growing increasingly pessimistic about the chances of securing a Brexit deal in time for this week’s summit amid growing resistance from Boris Johnson’s Northern Irish allies.

Johnson is struggling to win the support of the Democratic Unionist Party, whose votes will be crucial if Johnson is to get his agreement through Parliament. The DUP is objecting to concessions Johnson has offered to secure a deal with the EU, among them putting a customs border in the Irish sea.

But EU officials, too, are still concerned the revised plan leaves open the possibility that Britain could still undercut the EU in areas such as taxation, state subsidies and environmental standards. EU Chief Negotiator Michel Barnier is due to brief ambassadors on progress of the talks later today.

If a deal isn’t sealed and approved by the British Parliament by Saturday, then Britain will once again be pitched into a constitutional crisis that could result in a chaotic no-deal exit. Johnson will be told to seek an extension to EU membership, but he has sworn not to delay Brexit further and a legal battle will probably follow.

Key Developments
Talks went on late Tuesday night in Brussels, resumed on Wednesday morning
British and EU officials say the negotiations are stuck, with Johnson so far unable to persuade the DUP to back the draft deal
U.K. government held talks with hard-line Brexit-backers and DUP officials
Johnson needs a deal approved this Saturday or he will be told to seek an extension; that will likely prompt a legal battle with the risk of a no-deal exit
Second Summit Is Now Being Talked About (11:43 a.m.)
One EU diplomat said that the deal seems to be falling apart, and that an extra summit close to the weekend is probably going to be needed. It’s not a scenario the U.K. side are willing to contemplate right now.

Nevertheless, in Brussels it’s becoming a definite possibility because EU sees Johnson as legally bound to seek an extension. If he does, then an emergency summit become unavoidable from their point of view.

One possibility is Oct. 28, a Monday, three days before the U.K. is scheduled to leave.

Was EU Sounding Too Optimistic Last Night? (11:35 a.m.)
A U.K. official said the tone coming out of the EU on the state of talks was too optimistic last night. By tonight, there will be a clearer picture of whether both sides have got a deal.

There are bigger stumbling blocks than just the sales tax, specifically the future customs relationship between Northern Ireland and the Republic of Ireland (and thus the EU), and how to handle Johnson’s plans to give the Northern Ireland Assembly a veto of over future regulatory alignment with the EU.

Barclay on Extension Letter (11:20 a.m.)
Brexit Secretary Stephen Barclay, who is still answering questions from MPs in Parliament, says he’s “not aware” of any plan for the U.K. to send a second letter to the EU in the event of no deal being reached.

That’s after suggestions Johnson could send one letter to the EU on Saturday requesting an extension to comply with the Benn Act, followed by another to cancel the first.

On Oct. 4 Johnson’s lawyers promised a Scottish Court that he will obey the law and request an extension from the EU, while also arguing that there’s nothing to stop the prime minister continuing to say he intends to leave on Oct. 31

Emergency Summit Looming? (11:15 a.m.)
It’s now too late for the Brexit deal to be formally approved by leaders at their summit in Brussels on Thursday and Friday, an EU diplomat said. Leaders will want to wait for the House of Commons to vote on Saturday for any deal before they give a final yes, the diplomat said, speaking on condition of anonymity because of the sensitivity of the discussions. That could mean an emergency summit before the end of the month.

Level Playing Field: a Key Sticking Point (11.10 a.m.)
One of the main sticking points, according to two officials with the deliberations is the so-called level-playing field — the commitment of the British government that it won’t undercut the EU in areas such as taxation, state subsidies and environmental standards.

This is a thorny issue that falls mostly in Political Declaration on the future relations between the two sides, rather than the exit agreement itself. However, reaching a deal on one without the other is impossible, as the two documents are seen as a package.

Barnier Optimistic, But Three Roadblocks Key (10:56 a.m.)
Barnier told EU Commissioners that he is optimistic a deal can be sealed today, RTE’s Europe editor Tony Connelly tweeted. But he says three problems remain:

VAT: Sales tax has emerged as a last-minute roadblock
Consent: The DUP is pushing for a tighter Stormont lock
The level-playing field provision

Tony Connelly
@tconnellyRTE
BREAKING: Michel Barnier has told EU Commissioners he is optimistic of getting a deal done today, @rtenews understands
Sent via Twitter Web App.

View original tweet.

DUP return to Downing Street (10:54 a.m.)

Robert Peston
@Peston
DUP going back into Downing St, to try to find a way through roadblock.

Robert Peston
@Peston
Downing St AGAIN downbeat there will be real. Government source telling me: “Chances of a deal are low. DUP seem unlikely to support anything that’s negotiable”. This follows the meeting with DUP last night. To be clear, as I said last night, this could be final…


Sent via Twitter for iPhone.

View original tweet.

Barclay Rejects ‘Technical Extension’ Delay (10:40 a.m.)
Brexit Secretary Stephen Barclay was asked by MPs in Parliament if he would be happy for the U.K. to have a short, “technical” delay to the Oct. 31 exit day deadline to pass the legislation required for the country to leave the EU. “No,” Barclay replied. “It is important that we leave on the 31st October:”

Second EU Summit Possible, Varadkar Says (10:35 a.m.)
Another EU summit before the end of October is a “possibility” if it is needed to nail down a Brexit deal, Irish Prime Minister Leo Varadkar said. He said there is still time to get an agreement.

Varadkar spoke to Johnson this morning and has been “in contact” with the European Commission, he said. While talks are making progress, some issues remain unresolved on the questions of how customs checks on goods crossing the EU-U.K. border will work, and the kind of say over the new arrangements that Northern Ireland’s politicians will be given.

The Irish leader hopes a deal could be reached today, but “there is still more time” if not.

U.K. Will Seek Extension if No Deal Struck (10:15 a.m.)
U.K. Brexit Secretary Stephen Barclay told a parliamentary committee that Johnson will write a letter to the EU on Saturday if no deal has been agreed by then, in line with a new law. So far, Johnson has refused to say whether he would send the letter, determined to secure a deal.

“I confirm the government will abide by what is set out in that letter,” Barclay told MPs.

EU: Brexit Deal Impossible Unless U.K. Moves (10:01 a.m.)
Brexit negotiations in Brussels have reached an impasse, with two EU officials saying that a deal is going to be impossible unless the U.K. government changes its position in the negotiations.

The remaining issues cannot be resolved in the negotiating room unless Johnson’s government gives a new order to his team in Brussels to shift their red lines, one of the diplomats said.

The EU believes Johnson is trying but struggling to get the DUP — his Northern Irish allies — to support the draft deal which has been under discussion in the talks in Brussels, the person said.

DUP’s Wilson Warns Money Won’t Help (9:35 a.m.)
Sammy Wilson, an MP for the Democratic Unionist Party, denied reports that DUP leader Arlene Foster discussed a cash payment for Northern Ireland with Johnson yesterday to help secure her support for the Brexit deal.

“This is an issue of whether or not the union is weakened. If the union is weakened no amount of money will get us to accept the deal,” Wilson said in an interview.

The party has previously said it would support a deal that didn’t put a border in the Irish Sea, treated Northern Ireland the same as rest of the U.K. in terms of customs arrangements, gave a veto to the Northern Irish assembly and avoided checks at the border.

Conservatives Will Take Lead from DUP: Davis (9 a.m.)
Former Brexit Secretary David Davis, a committed Brexit-backer, said that securing the support of the Democratic Unionist Party will be key to getting Conservative MPs to vote for any deal Johnson secures from Brussels.

“Quite a lot of Tory MPs will take their line from the DUP,” Davis told BBC radio Wednesday. That’s despite the suggestion on Twitter of Tory MP Steve Baker late Tuesday that his group of pro-Brexit Tory MPs are “optimistic” they’ll be able to vote for a deal following a meeting with Johnson’s team.

DUP Is Resisting a Deal, U.K. Official Says (8:30 a.m.)
The Democratic Unionist Party is resisting the proposed divorce agreement and the U.K. side now thinks the chances of getting an agreement are low, according to a British official who spoke on condition of anonymity.

If Johnson can get a legal text approved in Brussels, he will then need to persuade Britain’s Parliament to vote for it, and for that he wants the DUP on side.

But the DUP is a “unionist” party, which means its members prize maintaining the economic and political unity of Northern Ireland with the rest of the U.K. above all else. And there are suggestions the deal Johnson is putting together will effectively split Northern Ireland from mainland Britain, with a new customs “border” for checking goods traveling between the two. That would be difficult for the DUP to swallow.

Both the U.K. and the EU want to avoid the need for customs checks on goods crossing the border between Northern Ireland and the Irish Republic. In the past the DUP and the U.K. government have refused to contemplate a solution that involves a customs border between Northern Ireland and the British mainland.

Lib Dems Demand Referendum on Any Deal (Earlier)
Leader of the Liberal Democrats Jo Swinson said her party is pushing for a second referendum whatever deal Johnson brings back from Brussels. “We will back a referendum — whether it’s on Boris Johnson’s deal, whether it’s on Theresa May’s deal — because we think it’s the public that should be in charge,” Swinson told BBC radio on Wednesday.

Her party has put down an amendment to government legislation for Tuesday calling for a referendum, although other attempts to force a second vote could come as soon as Saturday.

Earlier:
Brexit Talks Make Progress But Leave Johnson’s Key Allies Uneasy
Can Johnson Get a Deal Through Parliament? Silence Is Golden

–With assistance from Kitty Donaldson and Jessica Shankleman.

To contact the reporters on this story:
Ian Wishart in Brussels at [email protected];
Tim Ross in London at [email protected];
Nikos Chrysoloras in Brussels at [email protected]

To contact the editors responsible for this story:
Flavia Krause-Jackson at [email protected]
Emma Ross-Thomas

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