A live blog from FT.com
Lord Mandelson’s Brexit paradox
Writing in the Financial Times, former Labour minister and business secretary Lord Mandelson presented the Brexit negotiations as a “paradox”. He wrote: “the very event that was intended to give Britain greater control outside the EU can only be implemented by ceding even greater control to it. No wonder the cabinet is struggling to agree a position.”
At least one Brexit cabinet minister is “optimistic”
But in a more positive sign for Mrs May, Commons leader and Brexit supporter Andrea Leadsom told ITV’s Good Morning Britain she was “optimistic”.
“I’ve had a good conversation with the prime minister and I’m looking at the details of the deal today,” she said. “I’m extremely optimistic that we’ll have a good deal, but I’m looking at the details today.”
Sterling back to its lows for the day
Sterling fell back to its day lows as the cabinet meeting approached, the FT’s markets reporter Michael Hunter writes, down 0.5 per cent to $1.2916. While nerves over Brexit politics continued to set the pace, data for October showed consumer prices had failed to rise as expected, with inflation holding steady at 2.4 per cent. year-on-year.
Markets drift ahead of cabinet meeting
Michael Mackenzie, the FT’s markets commentator, said there is a limit as to how far investors can price in a very bad outcome.
“The pound has been volatile over the past 24 hours and has failed to sustain a rise above $1.30, which is right in the middle of a range between $1.28 to $1.32 seen since August. Having rallied to its best level versus the euro since April, the pound drifted back above 87 pence on Wednesday.
“The market reaction at this juncture remains guarded and for good reason; the Brexit saga has a lot more room to run.”
“Digging deeper into the currency market we can see investors still have reservations. Implied volatility for currency option contracts for the pound/US dollar pair over both one and three months have climbed to its highest level since January of 2017. Both measures ended Tuesday at their peaks for the session and have risen further early on Wednesday.
“This helps explain why global fund managers’ attitude towards UK equities has been one of avoidance, a position illustrated on Tuesday via the latest BAML monthly survey, which notes that allocations to UK equities decreased to net 27% from net 19% underweight, and it continues to be the most disliked region by the participants.
“This is hardly surprising as the performance of UK equities has been poor this year and even worse when viewed in terms of US dollars. In euro terms, equity losses are milder for the year, but that’s scant consolation for investors. True this has been a tough year for equities, especially for the FTSE 100′s big miners, banks and of late, oil companies as Brent crude has tumbled, but the positioning of global investors shows they have big doubts about life after Brexit.”
Third country deals
Asked by Jeremy Corbyn how things are proceeding with trade deals with the rest of the world, Mrs May says the government has been negotiating on two fronts on “continuity agreements” those trade deals already in place as members of the EU with other countries. She says there are also deals being negotiated with other countries in the rest of the world, without any specifics.
Earlier this week, the FT’s Jim Pickard revealed that in terms of one of its biggest trade partners, the US, the Department for International Trade has only carried out “preliminary” modelling into a potential post-Brexit trade deal and has refused to make the information public.
The importance of Dover
Jeremy Corbyn has a dig at the PM about Dominic Raab’s bizarre admission last week that he had only recently realised how important the Dover-Calais crossing is to trade for the UK. Mrs May responds by insisting her party knows more about trade than Labour.
May promises more details on draft deal
Back to PMQs and Kenneth Clarke, the former Tory chancellor and a party grandee as well as a leading voice for Remain, has asked Mrs May for a full statement to the House prior to the introduction of the legislation her government plans to put forward for parliamentary approval of the deal.
The PM responds that once Cabinet has made its decision in the “national interests” she will return to the House to explain the outcome of that debate but does not say when.
She also promises to make available a proper analysis of the draft Brexit deal along with briefings to MPs ahead of a parliamentary vote, which is currently expected some time before Christmas.
The view from Berlin
The European Commission has been quiet so far on the negotiations with Britain. But the German government this morning welcomed any progress “that ensures the UK’s exit from the EU occurs in an orderly manner”.
A spokesman said: “This would be above all be in the interests of people and companies. The European Commission will inform the member states this afternoon about the status of talks. After that we will individually evaluate the results. We will also have to wait to see how the British government responds to this.
“We all know that further steps towards a withdrawal treaty must progress quickly for ratifications to happen within the two-year deadline set out in the EU treaty. That means that time is still pressing.”
A second referendum?
The PM has resorted to using the her favourite buzz words during the debate when she is asked about Brexit, insisting voters opted to leave the European Union “and that is what we are delivering”. She avoids directly rejecting a call for a second referendum on any final deal but makes clear that she believes the first one was binding on her government.
She is asked a second time about giving the public a second vote on any deal and again avoids answering the question with a simple yes or no:
This Parliament gave the British people the vote on whether to stay in the European Union in 2016, the people voted to leave and it is this government that is delivering on that vote
PMQs over, all eyes on the cabinet meeting
That’s the end of Mrs May’s grilling in the House. She had a few uncomfortable moments and retreated to her mantra of delivering on the result of the referendum, while promising MPs more detailed analysis of the draft Brexit treaty once her Cabinet has decided on it this afternoon. That emergency meeting starts at 2pm and is likely to go on for some time.
May’s reliance on Labour
The FT’s Jim Pickard writes that Mrs May’s only hope of getting her deal through Parliament is persuading a large number of Labour MPs to support it – such as Caroline Flint, MP for the Don Valley.
There are half a dozen Brexiters on the opposition green benches who have backed Brexit legislation repeatedly over the last two years.
Beyond that, the prime minister needs the backing of various former Remain MPs – in Leave seats – who now want a Brexit deal to proceed apace. Some are concerned about letting down their voters while others fear the economic impact of a no-deal Brexit.
Ms Flint told the FT today that she would reserve judgement until she had read the full proposals. But she said that the deal appeared to offer reassurances on employment rights, environmental protections and the economy.
“On the surface it appears to be ticking some of the boxes, not just for me but also for Labour’s own six tests, if the leadership don’t support if they need to come up with the reason why not,” she said.
“My own constituents voted Leave, this was always going to be a compromise that does not give everything they want to Remainers or Leavers.”
Ms Flint, a former cabinet minister, said it was predictable that both Remainers and Leavers would be angry at the deal. “It’s posturing that turns the public off, they think we are playing games.”
The view from Dublin
Irish premier Leo Varadkar has offered to include a guarantee over Northern Ireland’s place in the UK in Britain’s EU withdrawal agreement, Arthur Beesley in Dublin writes.
He said such measures would mirror provisions in the Good Friday peace pact of 1998 that say Northern Ireland will remain part of the UK for as long as the majority there wants no change to its constitutional status.
“We’re very happy to have that written into any agreement giving them that legal guarantee,” Mr Varadkar told parliament in Dublin.
Northern Ireland’s Democratic Unionist party, which has propped up Theresa May’s minority government since the 2017 election, are threatening to vote against the deal. They argue that “backstop” measures to keep Northern Ireland under EU rules if there is no trade deal could break up the UK.
But Mr Varadkar, whose government is happy with the draft deal, insisted there is no threat to the UK’s territorial integrity and added that the protections over the region’s status in the Good Friday agreement remains in place.
“I know that for the unionist community in Northern Ireland at the moment this is quite a difficult time. I know many of them may be feeling vulnerable. Many of them may be feeling isolated and many of them may be quite worried about what may be agreed in the coming days,” Mr Varadkar said.
“And I want to say that to them that the Good Friday agreement will be protected and that includes a recognition of the fact that we respect the territorial integrity of the UK and that we respect the principle of consent, that there can be no change in the constitutional status of Northern Ireland unless a majority of people in Northern Ireland say so.”
“Best endeavours” and the Backstop
James Blitz, the FT’s Whitehall editor, writes that the draft treaty being put in front of the cabinet today makes clear that Britain has not won a unilateral right to exit the all-UK customs backstop, according to Whitehall insiders. This will infuriate Brexiters who believe the UK could be trapped in a customs union permanently.
According to these sources, the UK would be able to exit the all-UK customs backstop if it were able to demonstrate to a joint review body that the EU has failed to show good faith in trying to negotiate a future comprehensive trade agreement. This is described by official as the ‘best endeavours’ clause.
“The ‘best endeavours’ clause is certainly a strong one but it doesn’t give Britain any firm legal guarantees about getting out of the backstop,” admits one government adviser. “The EU was never going to give more ground on this because it would bind their decision making power to a degree they wouldn’t accept.”
A reminder that the backstop would only come into force at the end of the transition period which is currently envisaged to run to the end of December 2020 if no trade deal between the UK and the EU is in place. The backstop is designed to prevent a hard border on the island of Ireland.
Will AG or won’t AG?
Here’s an interesting line from BuzzFeed News, which reports that Attorney General Geoffrey Cox is expected to back the draft withdrawal deal.
This may well be very significant. Mr Cox’s backing is crucial. In fact, this is probably the only time since former AG Peter Goldsmith ruled it was legal for Britain to go to war in Iraq that the government’s top legal adviser has played a truly pivotal role in UK politics.
Mr Cox’s blessing, if it comes, signals he believes there is a way to legally resolve the outstanding issue of the Irish backstop – both showing the EU Britain is committed to it while also creating a mechanism allowing the UK to exit the arrangement
The FT’s James Blitz and Jane Croft wrote an analysis of Mr Cox’s role in the Brexit process here.
EU ambassadors in a lock-up
Ambassadors from the EU27 are in a closed-door meeting where they have been briefed by Sabine Weyand (picture below, right), the deputy of chief EU negotiator Michael Barnier (pictured, below left), on the state of talks. In an attempt to prevent any leaks to the press, diplomats have had their phones, laptops, and tablets taken away from them, writes the FT’s Mehreen Khan in Brussels.
Officials say the session could last up to three hours. In the most optimistic case for tonight, a press conference between Mr Barnier and Dominic Raab, the UK Brexit secretary, could take place at the European Commission by 7pm (local) at the earliest. We’d then get a published version of the Withdrawal Agreement by tonight.
Tony Blair: Brexit is like a biscuit coated in fudge
Speaking at King’s College London, the former Labour prime minister has compared the draft EU withdrawal treaty to a biscuit “coated in heavy fudge”.
It was “Brexit in theory but tied to Europe in reality, making a mockery of the reasons for leaving,” he said.
Mr Blair has been a persistent critic of Brexit in recent years, attacking his successor Jeremy Corbyn for sitting on the fence on the biggest issue of the era, chief political correspondent Jim Pickard writes.
The former prime minister, who left Number 10 in 2007, said the deal would be a “betrayal of Britain” because it would mean that the UK was sidelined without influence and “half in, half out”.
Mr Blair, who backs the idea of a second referendum, which supporters have dubbed a “People’s Vote”, has also written in an article for The Times that the British public would not want Theresa May’s compromise.
“Theresa May’s attempt to reunify comes from good intention but it is seriously misguided,” he wrote. “Her proposal — Brexit in name but tied still to Europe in reality — has indeed united Remainers and Leavers but only in opposition to it. Proceeding with it will cause the very opposite of the intention.”
Fishing could be a catch
Theresa May, now locked in a meeting with cabinet members over the draft Brexit withdrawal treaty, has received a further blow, Laura Hughes writes.
A group of 13 Scottish Tory MPs have signed a letter warning against fishing access and quotas that could prevent the UK from being an independent coastal state by December 2020.
David Mundell, the Scottish Secretary, was among the signatories.
The letter, which was handed into Downing Street this afternoon, said: “We could not support an agreement with the EU that would prevent the UK from independently negotiating access and quota shares.”
“We also cannot remain in the CFP (Common Fisheries Policy) after December 2020.”
Fishing rights have been a common theme of wrangles between European countries since at least 1958. And as Brexit negotiations have reached their latest crescendo, the fishing issue has once again become a make-or-break issue. The FT’s Alex Barker and Mehreen Khan explain the situation in more detail here
Renewed warning from the DUP
As the cabinet meeting drags on, Arlene Foster, the leader of the DUP, the Northern Irish party that props up the government, has just given an impromptu press conference at which she has restated her warning to Theresa May that she should not betray Northern Ireland in the final stages of Brexit. Ms Foster admits she hasn’t seen the draft treaty document yet and is not privvy to the discussions in cabinet.
But the FT’s bureau chief, Alex Barker, reported earlier that the draft treaty includes a protocol that makes unique arrangements for Northern Ireland, with the aim of upholding the peace process and avoiding a hard border dividing the island of Ireland.
This includes provisions that bind Northern Ireland to the EU’s customs code and single market rules, with checks on some trade with the UK mainland both at ports and in the marketplace. The UK has also made unilateral promises to minimise divergence with Northern Ireland by adhering to EU single market rules for goods, so keeping open the flow of trade to the British mainland.
Mrs May is expected to talk to Ms Foster later, says FT political correspondent Laura Hughes.
Media horde gathers
While FTSE 100 bosses are made to wait, the media is massing outside Number 10 Downing Street where the cabinet is still in session.
No-confidence vote on the cards?
Tory Eurosceptic MPs edged closer to triggering a vote of no-confidence in the British prime minister on Wednesday evening, says the FT’s Jim Pickard, capping a day of chaos in Westminster.
Until recently Jacob Rees-Mogg, chair of the European Research Group — which numbers about 60 anti-EU Tory MPs — had urged colleagues not to try to force a change of leader.
But on Tuesday night he said he was considering joining other Tory MPs in calling for a vote of no-confidence in Mrs May. Another Brexit-supporting MP added on Wednesday evening. “People are realising that they aren’t going to change the policy without changing the leader.”
The mechanism to trigger a vote of no confidence in the prime minister is 48 letters from MPs to Graham Brady, chair of the backbench 1922 committee. “There has been some letter writing today,” said one MP.
Theresa May’s supporters still believe she would win a vote of no confidence in a direct head-to-head with hardline Brexiters.
Cabinet meeting is winding up
Looks like Mrs May and her cabinet might just about have finished. All eyes now on the door of Number 10 Downing Street . . . . .
Cabinet agrees to draft Brexit treaty
Theresa May says that after a “long,drawn out impassioned debate” the cabinet has agreed the draft Brexit treaty “in the national interest”.
Was the cabinet unanimous?
Here’s a fuller take from the FT’s Jim Pickard on what the prime minister said earlier, who points out some of her language raises questions about whether there was unanimity in cabinet:
Theresa May has announced that the cabinet approved the UK-EU draft withdrawal agreement and outline political declaration after an “impassioned” five-hour debate on Wednesday afternoon.
The prime minister, standing on the steps of Downing St, said the government’s Brexit decisions had not been taken lightly and predicted difficult days ahead.
The marathon meeting had been “long, detailed and impassioned”, she said in a brief statement, not least because the decisions had been difficult – not least on the Irish border issue.
“I firmly believe that the draft withdrawal agreement was the best that could be negotiated and it was up to the cabinet to decide whether to move on,” she said, before saying that the cabinet had made a collective decision.
The use of the word “collective” raised immediate speculation that the agreement might not have been “unanimous”.
Mrs May said the country had a choice of whether to “take back control and build a brighter future for our country” or “go back to square one” – involving uncertainty and the potential collapse of Brexit. It was understandable that there would be great scrutiny of the agreement, she acknowledged.
“This is a decisive step that allows us to move on and finalise the deal in the days ahead,” she said.
The prime minister said the decisions had not been taken lightly but were made in the national interest. The choice was now to leave with “no deal or no Brexit at all”, she said.
Draft agreement text published
The European Commission has published the document, filled with lots of technical language. You can find it here. Just a reminder it runs to 585 pages.
Juncker hails “decisive” progress
Jean Claude Juncker, president of European Commission, has declared “decisive progress” has been achieved in the Brexit talks in a letter to Donald Tusk, EU Council president, tonight, reports the FT’s Mehreen Khan.
Barnier presser in Brussels
The EU’s chief Brexit negotiator, Michel Barnier, is giving a press conference in Brussels tonight, where he is running through the key elements of the draft Brexit agreement. He switches from French to English when he addresses the specific protocol on Ireland and Northern Ireland. After running through the main points of the so-called back-stop he stresses that it is “not meant to be used”
Transition extension clause open-ended
Alex Barker also reveals that the transition extension clause is a one off extension but currently has no fixed date other than that it would seem to expire at some point this century:
Big split in the UK cabinet
George Parker, the FT’s political editor, reveals there was a huge split in Theresa May’s cabinet over the deal with 10 Brexiters criticising it.
One aide to a cabinet minister said: “There was a big split in the cabinet. Downing St are making it sound better than it was. They should be on resignation watch.” Another person briefed on the meeting said “no one” was happy with the deal, but added: “Is the alternative worse? Yes.”
The FT’s Jim Pickard understands that Michael Gove, the environment secretary, was the only Brexiter to defend the deal during the fraught meeting.
McVey on the brink?
The FT’s Laura Hughes has been told by officials close to the Cabinet that Esther McVey, the work and pensions secretary, is “on the brink” of resigning. They added that she was “shouted down” by the Cabinet Secretary Mark Sedwill after demanding Cabinet voted on the deal.
Ms McVey has long been seen as one of the most likely Cabinet ministers to quit over the deal.
