Closed Brexit deal crisis: May fights on after Raab resigns – as it happened

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Barnier’s “damage limitation” praised

European Commission president Donald Tusk (pictured right) has praised Brexit negotiator Michael Barnier for ensuring the “limitation of the damage” caused by the UK’s withdrawal from the bloc.

Mr Tusk added that the treaty will be analysed by representatives of the 27 EU member states, who will “share their sentiments” on the agreement by the end of this week. Their work should conclude this Thursday, and an EU summit will be held on November 25 to discuss the deal.

Northern Ireland’s DUP calls the draft treaty a “betrayal”

The Democratic Unionist Party, whose MPs in Westminster have propped up Theresa May’s minority government since the 2017 election, are unhappy today. At issue is the so-called Northern Irish backstop, the concept of maintaining an open border on the island of Ireland to stop the two parts of the country being in different customs and regulatory regimes.

Under the backstop, Northern Ireland would be deeply integrated with the EU goods market, with arrangements that would permit the free circulation of goods with the bloc. But the more basic arrangements for the rest of the UK would not do so.

The DUP has fought hard against any agreement that treats Northern Ireland differently to the rest of the UK. Now DUP MP Jim Shannon has told the BBC “the unionist people have been betrayed…She (Theresa May) has broken the promises she made.” He added “we’re not afraid of anybody when it comes to the possibility of another election and a change of party in government.”

Northern Ireland minister quits

Mrs May suffered her first resignation on Thursday morning, the FT’s chief correspondent Jim Pickard writes, when Shailesh Vara quit as a junior minister in the Northern Ireland office.

In his letter to the prime minister, Mr Vara said the deal was a “half-way house” which did not allow the UK to become a “sovereign, independent country leaving the shackles of the EU.”

Labour spokesman: there “could be” a second public vote

Labour Brexit spokesman Kier Starmer has conceded a second referendum could now happen. Mr Starmer, who is nicknamed “steer calmer” in the corridors of Westminster for his measured approach to politics, is not exactly calling for the so-called People’s Vote that would give the public another vote on Brexit.

Speaking to the BBC in a live interview, he instead repeated Labour’s usual line that “if the deal is voted down” the opposition party would call for a general election. “If that doesn’t happen,” he said, “other options should be open, including the option of campaigning for [another] public vote.”

Statement to parliament expected as early as 10.30am

Mrs May is due to make a statement to parliament, expected to begin as early as 10.30am, chief political correspondent Jim Pickard writes. This will be followed by a question and answer session with MPs.

Keir Starmer: Brexit deal is a “miserable failure of negotiation”

Labour’s Brexit spokesman also took to Twitter this morning to condemn the draft Brexit treaty that Theresa May’s cabinet gave its blessing to last night. Opposition leader Jeremy Corbyn is so far staying quiet, however.

For those who cannot access Twitter, his post reads: Careful reading and analysis of the Government’s 500 page ‘deal’ reveals that it’s a miserable failure of negotiation.

Huge detail on a backstop (which government says it doesn’t intend to use).”

He is referring to the Northern Irish backstop, which is supposed to be an insurance policy against a hard border on the island of Ireland. Critics of the Brexit deal now fear it will become the future UK-EU relationship between 2020 and beyond. The FT’s Alex Barker and Jim Brunsden explain the backstop issue in more detail here

Market reaction so far

There were signs of a move to government bonds, which investors prize for their relative safety over riskier assets such as stocks (and tend to buy in times of economic or political uncertainty), markets reporter Michael Hunter writes.

The yield on 2-year gilts, which falls when demand for the UK government debt instruments rises, dropped by almost 8 basis points to 0.723 per cent, its lowest since late October. Five-year yields were down 7bp at 0.999 per cent, while benchmark 10-year yields fell 6.3bp to 1.443 per cent.

The moves stood out as wider European sovereign bond markets were flat.

EmoticonDominic Raab, the UK’s Brexit secretary, has resigned

Raab gives reasons for quitting

Dominic Raab has published his resignation letter on Twitter.

In it he says states his two reasons for quitting:

1 – the regulatory regime proposed for Northern Ireland ‘represents a very real threat to the integrity of the United Kingdom’

2 – the indefinite backstop arrangement ‘where to EU holds a veto power over our ability to exit’

He goes on to say that, overall, he cannot reconcile the deal with promises made in his party’s manifesto.

Raab lasted just five months as Brexit secretary, after replacing David Davis – who quit over Theresa May’s Chequers proposals.

Pound dives on Raab resignation

And here’s sterling reacting to the news on Raab. It has been behaving as the “Brexit pound” for a while now, hovering indecisively around $1.30. The market seems to have made a snap decision now, though.

Raab’s exit a major blow to May

The resignation of Dominic Raab, the Brexit secretary, is a devastating blow to Theresa May and could open the floodgates to more Eurosceptic ministers quitting the government, says the FT’s Jim Pickard.

Raab’s letters states: “No democratic nation has ever signed up to be bound by such an extensive regime, imposed externally without any democratic control over the laws to be applied, nor the ability to decide to exit the arrangement.”

Raab said it was a “matter of public trust” that he could not reconcile the proposed deal with the promises made to the country in the last Tory manifesto in 2017.

“My respect for you, and the fortitude you have shown in difficult times, remains undimmed,” he concluded.

Investors seek a haven

As the political turmoil deepened, a move by investors into the relative safety of UK government debt picked up speed. The buying spree is unlikely to be a show of support for Theresa May’s administration, but a flight from riskier UK assets such as shares in British companies. Gilt yields also fall when some investors predict economic weakness may lead to lower inflation.

On a week-view the chart does not look dramatic, but buying momentum is definitely there this morning.

The two-year gilt yield fell 9.5 basis points to 0.706 per cent.
The five-year gilt headline fell 10bp to 0.973 per cent. Benchmark 10-year yields fell 8.7bp to 1.42 per cent, an 11-day low.

Raab’s exit ‘will trigger others’

Laura Hughes, part of the FT’s UK politics team, has been gathering reaction to Dominic Raab’s resignation.

An official close to cabinet said Mr Raab’s resignation will “trigger the others”.
“If Brexiteers are thinking about leadership election, they don’t want to be the ones who stayed inside when others got out”, they added.

One Eurosceptic MP described Mr Raab’s resignation as “end game”, adding: “If the guy who was supposed to be leading it can’t support it then how can MPs or the country? It’s a horror show. There’s no way back. She has just got to go. This is an epic fail.”

A minister lamented: “We are in such turmoil – its now a dash for survival – get the numbers and run for the line. Expect casualties.”

Housebuilder stocks slump in sympathy with sterling

Shares in UK housebuilders have fallen to the bottom of the FTSE 100 as investors fled stocks most exposed to the domestic UK economy, in line with the rising risk of a disorderly Brexit, Michael Hunter, our markets reporter, writes.

And the pound is now 1.4 per cent lower against the dollar at $1.2812, putting it on course for its biggest single-day drop since June 2017.

Builders Persimmon and Taylor Wimpey were the two biggest fallers on the top-tier London stock index, down by around 5 per cent apiece.

Analysts worry over short term market reaction

Nomura says that Raab resigning just now “changes the ballgame. Hard to be optimistic on GBP in the short term”. But its analysts add that “Theresa May has survived much worse. It’s whether we get a flood of resignations to follow”.

What this means? The news flow looks to be turning materially against Theresa May substantially. The market loves a narrative and he is a big resignation so hedging flow (for the parliament vote/leadership threats) will see GBP head lower. This is short term though. The end outcome is that Theresa May finds a way and the deal gets approved, the UK avoids the political pitfalls. But we’re in for a messy way through the next few hours.

UK moves closer to the cliff edge

Robert Shrimsley, the FT’s editorial director, has given his snap verdict on Dominic Raab’s departure. His conclusion is stark:

It is hard to see how this deal can hold. It is hard to see how she can carry on. With five months until Brexit, the UK has never been closer to the cliff edge.

Read his full piece here.

UK bank shares tumble

We are now seeing strong selling of shares in UK companies that investors see as exposed to the British economy. Here is a fresh chart, courtesy of Andrew Whiffin of our fastFT breaking news service:

EmoticonEsther McVey, work and pensions secretary, quits cabinet

McVey batters deal in resignation letter

Like Dominic Raab, Esther McVey has published her resignation letter on Twitter.

In it she echoes some of Raab’s concerns about the draft Brexit treaty, but also says:

- The deal “does not honour the result of the referendum”.

- It will “trap us in a customs union”. It will “bind the hands of not only this, but future governments in pursuing genuine free trade policies”.

- It also “threatens the integrity of the United Kingdom”.

“We have gone from no deal is better than a bad deal, to any deal is better than no deal. I cannot defend this, and I cannot vote for this.”

Sterling slides below $1.28

The British currency is trading below $1.28, after hovering indecisively around the $1.30 mark for weeks ahead of Wednesday’s Brexit treaty cabinet meeting.

Here’s a note from investment bank Nomura, explaining this morning’s sell-off.

Raab resigning just now changes the ballgame. Hard to be optimistic on GBP in the short term.

But equally Theresa May has survived much worse. It’s whether we get a flood of resignations to follow.

What this means?

The news flow looks to be turning materially against Theresa May substantially. The market loves a narrative and he is a big resignation so hedging flow (for the parliament vote/leadership threats) will see GBP head lower.

This is short term though. The end outcome is that Theresa May finds a way and the deal gets approved, the UK avoids the political pitfalls. But we’re in for a messy way through the next few hours.

Emoticon May rocked by further resignations

Junior Brexit minister Suella Braverman and parliamentary aide Anne-Marie Trevelyan MP have become the latest to resign from their posts. Neither of the MPs serve in May’s cabinet but Ms Braverman was parliamentary under-secretary for the Department for Exiting the European Union, the government department responsible for overseeing Brexit negotiations.

Braverman blames the backstop

Here is Suella Braverman’s letter to Theresa May in full. In summary, she found plans for the Northern Ireland backstop untenable.

Theresa May is on her feet addressing MPs

The prime minister is on her feet recapping her speech from last night assuring MPs the deal the UK has negotiated will ensure a “smooth transition” – loud laughter resounded around the chamber in response.

Not comfortable

“I do not pretend this has been a comfortable process,” Mrs May has told MPs, to a few loud jeers from the house.

May seeks to reassure on the backstop

There is no deal that the British people have voted for that would avoid this insurance policy, she tells MPs. The backstop is designed to avoid a hard border between Northern Ireland and the Republic which would breach the 1998 Good Friday Agreement that ended years of conflcit.

Brexit talks are about the national interest

She again cites the Northern Ireland issue as a reason for the backstop and says she intends to “honour the promise” to ensure there is no hard border.

Ending freedom of movement

Mrs May reminds MPs that Brexit means the UK will no longer participate in free movement of citizens around the EU. “The declaration will end free movement once and for all” she says. “We will have our own new skills-based immigration system.”

No ready made blueprint for Brexit, says May

When I became prime minister in 2016 there was no ready made blueprint and lots of people said it couldn’t be done. I never accepted that, she says, as she seeks to assure MPs that her deal is best one on offer

Vote for this or go back to square one

“Voting against a deal will take us back to square one,” Mrs May argues.

She then lays out the choice of leaving with no deal, risking “no Brexit at all” (long and loud cheers from a large group of MPs for this one) or “we can choose to unite and support the best deal that can be negotiated.”

Going ahead with what Mrs May has negotiated, she says, will allow the government to “focus every ounce of our energy” on education, schools and tackling poverty.

Corbyn responds

As Mrs May ends by telling MPs: “I choose to deliver for the British people, I choose to do what is in the national interest, Labour leader Jeremy Corbyn gets to his feet and calls the agreement a “botched deal, that breaches the prime minster’s red lines and does not meet our six test”. Labour has said it will vote against any deal that does not meet the tests it set out.

No time limit to backstop

Mr Corbyn points out that the UK can not exit the backstop if it is triggered without EU agreement. He also highlights the fact that there are different arrangements in place in the backstop for Northern Ireland to the rest of the country that would put a “de factor” border down the Irish Sea, which would breach one of Mrs May’s red lines.

No clear plan to get a ‘strong deal’ with the single market

Mr Corbyn attacks the lack of a plan about how the UK intends to get access to the EU market in any future relationship. He says there is no clarity on future immigration nor on security issues such as the European arrest warrant.

“The government must now withdraw this half baked deal which does not have the backing of this government, this parliament or the country as a whole,” he says, as he finishes his reply and sits down.

May accuses Corbyn of not reading the document

Mrs May replies that she has “dealt with the border in the Irish Sea” and prevented one being put in place “we have achieved that,” she adds.

She insists the agreement spells out very clearly that the UK and EU plan to create a free trade area in the future and insists there are references to continued cooperation with agencies such as Europol.

She says what Mr Corbyn wants of course is to remain in the single market and the customs union.

The speaker now calls Kenneth Clarke, the former Tory chancellor, arch-Remainer and party grandee . . . .

A wild 24 hours for the pound

Kenneth Clarke stands up for the customs union and free movement

Veteran Conservative MP Kenneth Clarke is arguing to retain the benefits of being in the EU.

“The biggest single economic benefit we’ve enjoyed from [EU] membership over the last decades flows from the completely open border between the whole of the UK and the rest of the EU,” he says, citing “huge flows of inward investment, just-in-time lines of supply and very many thousands of jobs in this country.”

He then urges the Prime Minister not to change the present basis of these benefits until “we know what we are changing to.” Mrs May responds by pointing out that Britain cannot stay in the customs union after Brexit.

Scotland ignored, complains SNP

Ian Blackford, the SNP leader, gets to his feet and accuses the PM of not being able control her own party. “The deal is already dead, not even her Brexit secretary could stand over it,” he says, pointing out that the resignation of the Dominic Raab, who quit earlier as Brexit secretary, is the second minister to quit that post after David Davis earlier this year.

He also accuses the PM of ignoring the “desires of Scotland” which he says is not mentioned once in the agreement. Scotland voted overwhelmingly to Remain.

The price Scotland would be forced to pay is too high, he says, adding that the only credible compromise is to remain in the Single Market. He calls on Mrs May to go back to Brussels and “stop the clock” so the UK can renegotiate a new deal that the SNP can support.

May rejects SNP’s concerns

“Scotland is not specifically mentioned, Scotland is part of the United Kingdom,” Mrs May retorts, pointing out that Northern Ireland is a special case as it has a land border with an EU member state.

More worries about the Northern Irish backstop

Iain Duncan Smith, a former Tory leader, says he has “deep deep misgivings” regarding the Brexit treaty’s position on the Northern Irish backstop (that’s maintaining an open border on the island of Ireland, which Northern Irish unionists do not want). “There is a real issue on the way we will be treated with the backstop,” Duncan Smith says.

“We are locking ourselves into an arrangement from which we will be unable to have the sovereign right to withdraw, ” he adds. “My concern is that we have the sovereign right when we want,” he continues, to leave the UN, Nato and the EU. “But we do not have the sovereign right to leave this arrangement.”

Mrs May responds that, in ensuing negotiations with Brussels, the government will work to ensure that a backstop is not necessary.

No plans for no Brexit, says May

Vince Cable, the leader of the Lib Dems, the pro-EU party, says: “The prime minister rightly observes there are two alternatives to this deal, no deal and no Brexit.. The government says it is doing contingency planning for no deal but what is she doing for a no Brexit?”

Mrs May replies: “We are doing no planning for no Brexit because this government is going to deliver on the will of the people.”

DUP says Northern Ireland not considered

Nigel Dodds of the DUP, the Northern Irish party that props up the government, accuses the PM of not considering Northern Ireland in this process and urges her to “stand up for the integrity of the United Kingdom” or risk the the country becoming a “vassal” state, echoeing the words of Boris Johnson, the former foreign secretary and leader of the Leave campaign. The DUP do not like the wording of the backstop deal, which has different provisions for Northern Ireland to the rest of the country.

May says the backstop is something that neither the United Kingdom nor the European Union “wish to ever see” and that there are “alternative routes that can be taken”.

“No support”

Labour MP Chris Leslie has a pithy, if not exactly complimentary, summary of the debate so far.

“Not a single member or right honorable member has supported the plans the PM has set out,” Mr Leslie says, pointing out “‘we’ve been going for an hour now”.

Maybe some support for the Prime Minister will come later…

George Osborne sticks the boot in on Standard front page

Jacob Rees-Mogg raises prospect of no confidence vote in PM

The leader of the influential European Research Group, the main body of eurosceptic MPs in the Tory party, accuses the prime minister of not meeting her promises by pushing through an agreement that does not take the UK out of the single market, customs union and the jurisdiction of the European Court of Justice.

He then goes on to ask why he should not write to the chair of the 1922 Committee and declares he no longer has confidence in her as leader of the Tory party. if 48 Tory MPs put in such a request, it would trigger a no confidence vote in the PM. There are gasps in the chamber and at least one cry from the Conservative backbenchers aimed at Mr Rees-Mogg, saying: “You are a disgrace.”

Sterling stays on course for a sharp one-day drop

The pound remained off the worst of its lows during the debate on the terms of the prime minister’s Brexit deal, Michael Hunter writes.

Nonetheless, it remained on course for one of its biggest drops in two years, down 1.6 per cent at $1.2787. At its day-low it reached $1.2749, down 1.9 per cent.

Sterling was also 1.6 per cent weaker against the euro, with 88.43p required for a unit of the shared currency.

That was the pound’s weakest level against its nearest neighbour in just over two weeks.

Pressure mounting on May

As the questions continue from backbench MPs the pressure is mounting on the prime minister. John Bercow, the speaker of the Houses, can be heard sighing occasionally as he calls another MP to speak. So far very few MPs have had a good word to say about the Brexit deal.

Senior Tories come to May’s aid

The former Home secretary Amber Rudd – a staunch Remainer – gives the PM some relief by pointing out to MPs that the poorest people in the country will be hardest hit by a no deal.

Sir Nicholas Soames, another senior Tory, joins in by congratulating Mrs May on getting a deal in the most difficult of circumstances.

Nicky Morgan, another prominent Remainer, also offers Mrs May her support.

May: we will leave on 29 March next year whatever

Sir Edward Leigh, a hard-line Tory Brexiter, warns the PM that she is unlikely to get the Brexit deal past Parliament and goes on to ask her if she will guarantee to deliver Brexit “at the end of March [next year] whatever happens to the parliamentary vote.”

Mrs May replies: “We will be leaving the European Union on 29 March 2019 whatever happens in between.”

Corbyn on shortest odds as next PM

A Labour government still favourite ahead of a Tory party led by Boris Johnson or Dominic Raab, according to William Hill.

That divorce bill

Eurosceptic Conservative MP Peter Bone is arguing that the UK does not need to pay the EU a financial settlement for leaving.

“The government is preparing to give £39bn to the EU and there is no legal obligation to do so and we are going to get nothing in return,” he argues.

“That is £60m for each and every constituency in this country,” he says, which he adds is a sum of money he could do with for his Wellingborough constituency

Mrs May responds that she believes the UK is legally obliged to pay a settlement.

Europe watches

Across the channel, the political turmoil in the UK is causing concern, according to the FT’s Paris correspondent David Keohane. French Prime Minister Edouard Philippe has said that France must be prepared for a potential no-deal scenario.

We need to prepare ourselves for the possibility of a ‘no-deal’ Brexit. The current political situation in Britain fuels uncertainty over the ratification of the accord

Mundell: I won’t take lessons from ‘carpetbagger’ Raab

David Mundell, the secretary of state for Scotland, has been speaking to ITV, and has taken Dominic Raab to task over his decision to quit the cabinet this morning.

“I’m not taking lessons on standing up for our United Kingdom from carpetbaggers,” he said. “I’m sure this is more about maneuvering and leadership.”

A longer clip can be seen for Twitter users here.

British people have been “sold out”, says Hoey

Labour MP Kate Hoey says that when people read the treaty they “will realise” they are being “sold out” and that “the people of Northern Ireland are being sold out absolutely”.
Mrs Hoey is a Brexiter who has been very outspoken on the issue of the Northern Irish backstop (see here).
Mrs May responds that the negotiations have been “tough” and that she scored a victory by achieving a bespoke agreement for the UK instead of a Norway model or a Canada model.

Raab speaks out on deal

Dominic Raab, who of course resigned as Brexit secretary earlier today, has unsurprsingly told the BBC he doesn’t think the deal will get through parliament.

Midday update

- Prime Minister Theresa May is fighting to save her Brexit deal in a bruising session with MPs in the Commons

- Five MPs have quit their positions in her government today, including Brexit secretary Dominic Raab, work and pensions secretary Esther McVey and junior Brexit secretary Suella Braverman

- Eurosceptic MPs have threatened to submit letters of no confidence in the prime minister later on Thursday

- Sterling on course for its biggest drop in two years, trading near a daily low against the dollar and euro

More calls for a People’s Vote

MPs who have been backing a second Brexit referendum, dubbed the People’s Vote, are using the debate to do so again.

Labour’s David Lammy says the deal will not get through parliament, and that when politics is broken, the decision should go “back” to the people.

This follows similar arguments from Labour’s Luciana Berger, who says a YouGov poll has shown more than 60 per cent of Britons are in favour of a second referendum.

Labour’s formal position, however, is that it wants a general election.

Chamber beginning to empty out

The House of Commons chamber has been packed for the best part of 2 hours as Theresa May takes question after question. A quick look across the benches now however shows a growing number of gaps on both sides

Downing St’s deal defence

Robbie Gibb, No.10′s head of communications, has tweeted a pithy defence of the draft deal:

This deal delivers Brexit.

It takes back control of our borders and ends free movement.

It takes back control of our money so we can spend it on the NHS.

It takes back control of our laws.

We are coming out of the Common Agricultural Policy and the Common Fisheries Policy.

“Everyone agrees the deal is bad”

The FT’s chief economic commentator Martin Wolf writes:

Congratulations! UK Prime Minister Theresa May has succeeded in uniting her deeply divided nation. Everybody agrees on one thing: the deal she has come up with is terrible.

For Remainers, it is evident that this quasi-permanent halfway house, which will keep the UK inside the EU’s customs area and divide Northern Ireland from the rest of the UK indefinitely, would be far worse than continued EU membership. For Leavers, it is equally evident that this very same halfway house would be far worse than a clean break.

Unity is achieved at last in the midst of Britain’s civil war over its future relationship with Europe: both sides oppose what has been agreed.

To read the rest of Martin’s column, click here

Gove for Brexit secretary?

The FT’s Laura Hughes has heard from ministerial aides that they believe Michael Gove, the Eurosceptic UK environment minister, has been offered the role of Brexit Secretary.

Another PPS resigns

This time is Ranil Jayawardena. His resignation letter is here for Twitter users.

Rees-Mogg calls for May leadership challenge

Jacob Rees-Mogg, leader of the influential European Research Group, is widely reported now to have written a letter likely to spark a leadership challenge to the prime minister following a lunchtime meeting.

Ministerial merry-go-round

The FT’s Laura Hughes who earlier reported there were strong suggestions around that Michael Gove has been offered the role of Brexit Secretary, is now hearing that backbencher Rory Stewart could replace one of the most senior Tory Eurosceptics as environment secretary.

Just a reminder that while Theresa May continues to hear from predominantly hostile MPs in House of Commons that she will not get her deal through parliament, the prime minister has so far lost two cabinet colleagues and four other junior ministers or ministerial aides:

Esther McVey, work and pensions secretary
Dominic Raab, Brexit secretary
Shailesh Vara, a junior minister in the Northern Ireland office
Suella Braverman, a junior Brexit minister
Anne-Marie Trevelyan, parliamentary aide
Ranil Jayawardena, parliamentary aide

Brexiter dreams on special access for City ‘dead’

The outline of the declaration on Britain’s future relationship with the EU confirms that the original Brexiteer dream of special arrangements to preserve the City of London’s market access are dead, writes Jim Brunsden, the FT’s EU correspondent in Brussels.

UK hopes of a wide ranging agreement that would provide guaranteed access for the UK financial services sector had already vanished by the time of Theresa May’s Chequers proposals earlier this year.

The draft declaration confirms what the EU has long insisted: that Britain will need to make use of an existing patchwork of access rights, known as equivalence provisions, that are already used by banks and traders in other non-EU countries including the US, Japan and Singapore.

The provisions do not replicate the benefits of EU membership, but cover certain key issues such as the ability for European banks to use UK-based clearing houses, and the removal of obstacles for investment firms seeking to market services to EU clients. Other limitations include the fact that the rights are in the EU’s gift, and depend on an assessment that another country’s rules are as tough as the EU’s own. They can also be withdrawn at short notice.

On the brights side, while the declaration rules out special treatment for the UK, the document does underline that the EU is serious about making equivalence work.

The outline says that EU work on equivalence assessments should start “as soon as possible” after Brexit day, with the goal of completing them “before the end of June 2020″, so ahead of any decision on whether to extend the UK’s post-Brexit transition period.

The outline declaration also echoes language in trade deals the EU has struck with countries such as Canada and Japan, saying the two sides should have a “close and structured cooperation on regulatory and supervisory matters.”

Jacob Rees-Mogg will act later today

The FT’s Laura Hughes has learnt that Jacob Rees-Mogg, the leader of the hardline pro-Brexit faction of Conservative MPs, will submit a letter of no confidence in the prime minister later today. As we reported a little earlier, the move by the most prominent member of the European Research Group, is likely to trigger a leadership challenge to Theresa May.

Rees-Mogg letter published

Jacob Rees-Mogg, a leading Tory Brexiter, has submitted a letter of no confidence in Theresa May in a move that may trigger a wider coup against the British prime minister, writes the FT’s Jim Pickard.

Mr Rees-Mogg, leader of the European Research Group of about 60 Tory MPs, said he had tried to avoid the “disagreeable nature” of a formal vote of no confidence – given it could engender “ill will”.

But he said that the draft withdrawal bill had turned out to be worse than anticipated and failed to meet the promises given by Mrs May to the nation.

Threshold for no confidence vote not yet reached, says BBC

Laura Kuenssberg, the BBC’s political editor, says that the key threshold for a leadership contest – 48 letters from Tory MPs to the chair of the 1922 committee of backbenchers – has not yet been breached.

Theresa May, after 2 hours and 58 minutes, has finally stopped taking questions from MPs on the floor of the House of Commons, she adds.

Rees-Mogg addresses the press outside parliament

He denies launching a “coup” against the prime minister, instead saying he is simply using the established mechanisms of the Tory party to remove a leader from office.

He refers to Brexit as a “fantastic opportunity” that is “being thrown away”.

“This is not Brexit, this is a failure of government policy. It needs to be rejected,” he adds.

He says his move against May is nothing to do with leadership ambitions. He says the party is “likely to be full of talent”, then lists a number of pro-Brexit MPs – all of whom have quit the cabinet over Brexit policy. He blames the current situation on having a Remainer as PM.

He also calls for a no deal Brexit, so that the UK can trade on “WTO terms”, but also says the UK should make a “generous offer” to the EU in order to secure a transition period.

Can Tory rebels topple May?

Assuming 48 Tory MPs do back calls for a leadership challenge, it is far from clear whether they would succeed in toppling Theresa May in a secret ballot and indeed who would take over, writes James Blitz, the FT’s Whitehall Editor.

If 159 MPs go on to vote against the PM, that is 51 per cent of MPs, Mrs May will be removed and a full scale contest to find a new leader would have to be held. If the rebellion falls short of 159, Mrs May cannot be challenged for another year.

But would the Brexiter rebellion muster the 159 that are needed? Many MPs believe it would only succeed if there were a clear consensus about who the replacement candidate should be. And this would require, in turn, a consensus over the party’s post-May Brexit strategy.

A few names are talked about as possible stand-ins. One is David Davis, the former Brexit secretary, who backs a Canada-style deal. Another is Michael Gove, the environment secretary, who is said to back the Norway for Now option.

The trouble is that neither of these Brexit strategies enjoys clear support across the Tory backbenches and certainly not in parliament. So it is not clear what could be achieved by bringing either of them into Number 10 now.

Moreover, any contest would be bound to see plenty of cabinet members piling in. Jeremy Hunt, Sajid Javid and others make no secret of wanting to be leader. They would not want to miss this chance.

However, many Tory MPs recognise that the one thing the Tory party (or the country) does not have time for now, with just four months to Brexit, is a protracted Conservative leadership contest.

Evening Standard reports Gove turns down Dexeu job

Here’s the second edition of the Standard’s front page.

Rees-Mogg expects leadership challenge will happen

The FT’s Laura Hughes was with the other journalists listening to Jacob Rees-Mogg speak outside parliament. Asked if there are enough letters to trigger a vote of no confidence, he says: “We will have to wait and see. I think the letters will go in.”
Asked if he would make a better leader than Theresa May, he says “this about not having confidence in the current leader.”

Leadsom vows to stay on

In a rare glimmer of good news for May on an otherwise awful day for the prime minister, Andrea Leadsom has just told the House of Commons that she is “staying” in government, says the FT’s Jim Pickard.

Leadsom, leader of the Commons, had been seen as one of the hard-core Brexiteers in the cabinet on “resignation watch”.

Number 10 rolls out big business backing

As pressure mounts on the prime minister from within her own party and from opposition benches in Parliament, 10 Downing Street has taken to Twitter to trumpet the support the draft withdrawal agreement is getting from big business. Among them is this from drinks giant Diageo:

Corbyn lays into May on Twitter

Jeremy Corbyn, who started off the day tight-lipped, is now swinging punches at the Prime Minister and her Brexit deal.

Here he is on Twitter, where he has also supplied a video of his performance in the parliamentary debate earlier today, just in case you missed it. If you’d like to watch the video please click on the link to the Tweet:

UK-facing stocks under pressure

Stocks exposed to the UK economy tumbled on Thursday as parliamentary resignations over Prime Minister Theresa May’s draft EU withdrawal agreement threw the Brexit process into chaos, writes FT’s Bryce Elder.

Royal Bank of Scotland was the sharpest faller among the financial stocks, losing nearly 9 per cent. Bovis was down 9.5 per cent, Countryside had lost 10 per cent, OneSavings had dropped 5.8 per cent and Thomas Cook was lower 4.6 per cent.

Indices tracking UK electricity companies, transport operators and general retailers all fell more than 4 per cent, while those tracking banking, telecoms and life insurance retreated about 2 per cent.

But the overall FTSE 100, which takes an estimated three-quarters of revenue from outside the UK, was little changed by mid-afternoon as investors switched into dollar and euro earners such as Unilever, Randgold Resources and Smirnoff owner Diageo.

Another resignation

Emoticon The FT’s Laura Hughes reports that Rehman Chishti, MP for Gillingham and Rainham, resigned on Thursday afternoon as vice chairman of the Conservative party and Mrs May’s trade envoy to Pakistan, saying he could not support the draft agreement. That’s the seventh resignation today although very much on the lower end of the scale.

Theresa May to hold press conference at 5pm

Downing Street has announced the prime minister is going to hold a press conference at 5pm. Worth remembering that Mrs May spent 3 hours in the House of Commons earlier facing down hostile MPs.

Small business warns of ‘nightmare’

Sarah Gordon, the FT’s Business editor, has been getting reaction to the growing crisis over the draft Brexit withdrawal treaty.

Small business representatives warned that, if the withdrawal agreement failed, the “nightmare” of a no-deal Brexit would come closer to reality. Mike Cherry, who chairs the Federation of Small Businesses, said this would be “damaging and dangerous” for small companies.

“The prospect of a no deal Brexit is already leading to some small businesses shelving business decisions, pausing investment and more drastically, thinking about cutting staff,” he said.

Emma Jones, head of Enterprise Nation, who co-chairs the prime minister’s small business council, said smaller companies hadn’t been able to spend “millions of pounds on expensive advice”. “With 20 weeks to go, they are only now just putting their heads above the parapet to consider making contingency plans. If this agreement is thrown out, and political chaos ensues, they may well put their heads straight back in.”

The withdrawal agreement would protect product designations like Parma ham, Champagne, Tokaj wine, which Ms Jones said was an important win for small UK business.

“Geographical names would be protected – so we get to keep Cornish pasties and Welsh lamb.”

CBI issues a terse warning

Now it’s the turn of big business to come to the PM’s aid in selling the deal. Public pronouncements from the UK’s largest business lobby group are often bland. But the CBI had unusually strong words on Thursday as political turmoil threatened to derail the Brexit withdrawal agreement, writes Sarah Gordon.

“No one should delude themselves – if the withdrawal agreement failing means crashing out of the EU without a deal, it would be a disaster. No one wants a gridlocked Dover, a panicking financial system, medicine or rising food prices,” said Josh Hardie, CBI deputy director-general.

“Securing a transition period has long been firms’ top priority. Each day that passes without agreement means lost investment and jobs.”

Here’s the CBI’s statement from yesterday, which makes it clear the lobby group is far from happy with the deal but accepts that it is much better than a “cliff-edge” Brexit.

EU leaders have no appetite to re-open talks

Our team in Brussels report that EU leaders are in no mood to offer hope to anyone in the UK thinking a renegotiation is possible, shunning the idea of reopening talks on the withdrawal deal as they stressed the need for worst-case planning in the face of political upheaval in Westminster.

Alex Barker and Jim Brunsden report that even as Theresa May’s government is brought to the brink of collapse by ministerial resignations, the EU side is showing little appetite to redraft a day-old agreement on a Brexit treaty that several member states see as already conceding too much.

Angela Merkel, the German chancellor, voiced the weariness of many European capitals on Thursday, saying there was already “a document on the table that the UK and EU27 have agreed”. “That is why for me the question of further negotiations does not arise at all.”

Earlier in the day, Edouard Philippe, French prime minister, said there was still a need to prepare for a no-deal Brexit even if France “does not want it”.

Tusk leaves door open to remaining

It’s not the first time the European Council president has said it, nor – probably – the last. But Donald Tusk told reporters in Brussels today that the door to staying in the EU was still open.

“The EU is prepared for a final deal with the United Kingdom in November”, he said. “We are also prepared for a no-deal scenario but of course we are best prepared for a no-Brexit scenario.”

Bank of England and the Financial Conduct Authority on alert

The two financial regulators, the Bank of England and the Financial Conduct Authority, have been closely monitoring the markets in the wake of the sharp fall in the pound, says Caroline Binham, the FT’s financial regulation correspondent.

Banks, asset managers and investment firms were summoned onto conference calls earlier today with the regulators, who are concerned about maintaining liquidity and general financial stability. UK financial stocks have also taken a hammering over the day.

One person on the regulators’ call said that the overall message was that the City was well prepared for market dislocations. The call was described by another senior banker as routine, with regulators asking about exposures to sterling and general market positions over the day.

The BoE has said for the last year that UK banks have enough capital to withstand the harshest of possible Brexit consequences.

The FCA said on Thursday: “As you would expect, in this type of situation, we have regular contact with firms and will continue to engage with them.”

Momentum grows behind no-confidence campaign

The mood among Eurosceptic MPs is rapidly darkening. In private, senior Eurosceptics believe they will have the crucial 48 letters of no-confidence in Theresa May to trigger a leadership contest by the end of Thursday. Of course many of the prime minister’s critics have predicted this before. But now there is clearly momentum behind the campaign to remove her, writes Sebastian Payne, an FT political commentator.

MPs of all ages and political persuasions are lining up to say the prime minister must go. The anger towards Downing Street and Mrs May’s prospective Brexit deal has been building for weeks. Until now critics of her strategy have been able to disentangle the policy from the person. That division has ended.

All eyes are on Sir Graham Brady, chairman of the Conservative party’s 1922 committee, to announce if/when the threshold of 48 letters has been met. It seems increasingly likely there will be a vote of confidence in Mrs May soon – possibly on Monday.

One of the Tory’s newest MPs calls for May to go

Lee Rowley, who was elected as a Conservative MP in 2017, revealed on Thursday that he had submitted a letter of no-confidence to the chairman of the 1922 Committee.

The FT’s Laura Hughes says that as a new MP, this will come as a huge blow to the prime minister. Two other MPs, Martin Vickers and Sheryll Murray also handed in letters, they said.

David Cameron spotted… in Florida

The FT’s City Insider column has this update from Naples, Florida:

As the Brexit process descended into chaos in London, with ministers resigning in droves, where was the man who instigated it all? Is David Cameron racked with guilt? Is he holed up like a hermit, unable to come to terms with the mess he has unleashed?

Not exactly. He’s been sunning himself in Florida on a paid-for gig to tell the CME Global Financial Leadership Conference what he thinks about Brexit. There was an off-record discussion with his old pal Michael Spencer, and then a chance to queue for a one-on-one photo.

City Insider’s man in Naples duly did so, only to be stonewalled when he asked about the mayhem back home (“No, no, no, no…” blurted a red-faced Dave) before being manhandled out of reach of the great man.

The world’s media are waiting

The TV feeds are on in Downing Street and the world’s media is waiting for Theresa May, the embattled prime minister, who has already seen two cabinet colleagues resign today along with four junior minister and aides. She is also facing growing calls from her own MPs to quit. The press conference was called for 5pm (GMT) but Mrs May appears to be running a bit late.

May is now speaking

She says it is a great responsibility to negotiate the UK’s withdrawal from the EU after 40 years.

My approach throughout has been to put the national interest first, not a partisan interest and certainly not my interest.

She adds that she is “sorry” to see that some of her cabinet minister have decided to quit and once again emphasises her belief in the deal she has negotiated.

Early signs are that this is a fresh sales pitch for her deal.

Will of the people

Sounding a bit hoarse the prime minister repeats her mantra that she is delivering the will of the people and a Brexit that works for the whole of the UK.

That is what the people we serve expect and that is what we will deliver

Confidence vote

Is it in the national interest to fight a confidence vote?

She replies to say that leadership is part of the job and then reverts to her standard Brexit messaging about “delivering the will of the people” and “delivering for the British people.” The PM basically avoids the question.

In office but not really in power?

Laura Kuenssberg of the BBC puts it to Ms May that she “in office but … not really in power”.

Ms May says that there will be negotiations focusing on the future framework of the deal, with details filled out out at an EU council meeting, which will be brought back for a vote in the Commons.

“I’m going to do my job getting the best deal for Britain in the national interest,” she says.

“When vote comes before the Commons MPs will do their jobs. They’ll need to consider that deal”. She adds that they’ll be held to account by their constituents.

Is the PM in denial?

The PM is asked if she is in denial about getting the vote through parliament given the amount of opposition to the deal.

She replies: “I am going to do my job in getting the best deal for the United Kingdom.” She says she will then put it in front of parliament and it is up to MPs to decide.

“Most people watching this will recognise this is not an easy thing to do . . . and what they will recognise is that it will deliver a great future for the country, she adds.”

The view from Brussels

Ms May is asked how the situation might look like from Brussels and Europe.

She replies that President of the European Commission Jean-Claude Juncker has written to the EU council head Donald Tusk to say “decisive progress has been made” and on that basis a council meeting has been called for the 25th of November.

“I think they see a government intent on working with them to ensure we deliver a good deal for the British people,” she adds.

“I’ve always said a good deal for the UK is a good deal for the EU as well”.

More concessions?

It is put to the PM that she has offered Michael Gove the job of Brexit secretary but he will only take the job if he is allowed to go back to Brussels to try to get further concessions.

She points out she has had a rather busy day and avoids the question by praising Michael Gove’s role as environment secretary.

Tough decisions

The PM is asked what decisions she has found personally hard and tough in arriving at the proposed deal.

She says that she recognised concerns around the Northern Irish backstop, but insists that “overall, looking at the national interest, we agreed as a cabinet and as a government that the deal we have is the right one to proceed with”.

Risk of no Brexit

Mrs May is asked if this risk is becoming a real threat. She replies that some MPs today called for the UK to remain in the the EU and points out that she “strongly disagrees”.

I promised to deliver Brexit on 29 March next year and that is what I will do, she says. This is an echo from an earlier reply to a question in parliament, where she indicated she was ready to take the country out of the EU without a deal.

Second referendum

Ms May is asked about a second referendum on EU membership.

She says she has made her views clear on the subject – and rules out the possibility.

“Most MPs recognise that they gave a vote to the British people and they voted and it’s up to [us] to deliver on that vote and not have a second referendum”

“As far as I am concerned there won’t be a second referendum”.

General election regret

May is reminded of the fact she called a general election last year that left her having to rely on the DUP for support. Does she regret it? She bats the question straight back with a firm no.

As we expected, the PM has played it very straight. She praised the cabinet ministers who had quit – Brexit secretary Dominic Raab and Esther McVey, the works and pensions secretary – as being sincere but in the wrong.

And that’s it from the Downing Street press conference

Theresa May wrapped that up pretty quickly. Other than sounding a bit hoarse, the PM once again showed her resilience and little sign of her ordeal in the House of Commons earlier today in which she faced down 3 hours of almost entirely hostile questioning from her own MPs as well as opposition politicians.

Resignations recap

Just as a reminder, Prime Minister Theresa May has been rocked by a series of resignations today from members of the government who felt they could not support her Brexit strategy, including two cabinet ministers.

They were:

Dominic Raab (Brexit Secretary)
Esther McVey (Work and Pensions Secretary)

Junior ministers
Shailesh Vara (Northern Ireland Minister)
Suella Braverman (Brexit Minister)

… and two parliamentary aides – Ranil Jayawardena and Anne-Marie Trevelyan.

In addition, Conservative party junior vice chairman Rehman Chishti quit his post.

The FT view: “Britain’s priority is to avoid a no-deal Brexit”

We have just published the FT editorial board’s view on Brexit following a day of high political drama. Here is a taster of the piece, which you can read here.

The prospect of Britain crashing out of the EU without a deal is now frighteningly real.

Whatever happens in the coming days and weeks, the priority is to avoid that outcome — one which would layer an economic crisis on top of a political one. This newspaper has made clear its unease with Mrs May’s agreement, which is manifestly inferior to remaining in the EU while failing to deliver any of the benefits promised by ardent Brexiters. But a no-deal exit remains emphatically the worst option.

There should be no illusions about how damaging such an outcome would be, for jobs and the economy, for Britain’s security and for its place in the world. Defaulting to basic World Trade Organization rules for trade with the EU would mean tariffs and border checks. Shortages of food and other vital goods could result. Motorways in Kent would be clogged with trucks; supply chains would seize up. The health secretary reportedly told colleagues on Wednesday that he could not guarantee that people would not die as a result of a no-deal Brexit …

Brexiters still don’t have the numbers for a leadership challenge

The FT’s Laura Hughes has spoken to a member from the European Research Group who says the number of letters from MPs calling for a leadership “have certainly gone up but reckon they are still in 30s” – a reminder that Conservative Party rules state that 48 MPs must express no confidence in the leader to trigger a contest.

Appearing on Sky News, Kenneth Clarke, an ardent Tory Remainer and former chancellor, says he has absolutely no doubt that Theresa May would win a no confidence vote. Although he said he would probably support the PM’s deal he pointed out that it was very complicated as it stands. He says there would be enough MPs in Parliament who would settle for simple “soft Brexit” meaning the UK remaining in the single market and customs union and getting out of the political union. He suggest this position should be maintained until a time in the future when the UK is ready to put forward a better thought future relationship with the EU. This of course is wishful thinking by Mr Clarke as things stands because Mrs May has already indicated that it is either her deal or no deal and insists she will take the UK out of the EU on March 29 next year whatever happens between now and then.

Brexit in charts

A quick plug for a new dedicated page for FT visuals if you want to keep up to date on the latest graphics from our Brexit stories and other topics click here. (Please note this is a beta service so is not yet available for app users)

More resignations to come?

There are more rumours doing the rounds in Whitehall about another possible big fish considering his future in Theresa May’s government. The FT’s political editor, George Parker, reports that Downing Street is on alert for the possible resignation of Michael Gove, environment secretary, who along with Boris Johnson fronted the 2016 Vote Leave campaign.

With Mrs May battling to save her Brexit deal and her own position as prime minister on Thursday it would come as little surprise to learn that we are not expecting her to reshuffle her cabinet tonight. As it stands she needs to find a new Brexit secretary after Dominic Raab resigned this morning, along with a new works and pension secretary following Esther McVey’s departure too.

Meanwhile, Mrs May intends to stare down her many critics telling a Downing Street news conference earlier she would stick to her plan, which would keep Britain closely tied economically to the EU, and said she was not about to quit in spite of growing criticism from Brexiters in her own party, who as yet do not appear to have the 48 names needed to challenge her leadership of the party.

You can read the latest splash form the FT’s parliamentary team here

Some good news for May?

And we’re going to end on what would appear to be a rare bit of good news for Theresa May on what must be one of the most testing days of her political career. The FT’s George Parker is hearing that Downing Street is hoping the prime minister has persuaded Penny Mordaunt, international development secretary, not to quit. Ms Mordaunt was strongly tipped earlier as one of the most likely Brexiters in the cabinet to walk in protest at the draft withdrawal deal.

That’s it in terms of our live coverage today. We will keep you updated on throughout the night.

Thanks for joining us