Britain and the EU set for high-stakes game of blackjack
Theresa May left the EU leaders’ summit with talks still deadlocked over the question of the so-called Brexit bill. As a consolation, EU leaders have agreed to open “internal preparatory discussions” on the future UK-EU relationship, but this would be strictly intra-eu. Britain will not be invited to participate.
For her part, Mrs May still refuses to spell out what “commitments” the UK would honour in a Brexit financial settlement, insisting the €20billion she offered in her speech in Florence ought to be enough to move talks forward.
So what happens next? Here we look at Mrs May’s options ahead of the next EU leaders summit on Dec 12.
Stick: May stands her ground How will the European Union react?
The EU remains wedded to its hardline position that there will be no trade or transition talks until it judges that “sufficient progress” is made on the Brexit bill, Ireland and citizens’ rights.
EU diplomats expect concrete proposals if they are to give the go-ahead to discussions on the future relationship. That means the UK saying what it will pay for, though not necessarily specifying how much.
“The only way this process moves is if May talks specifics. That means she must address pensions, loan liabilities and the reste à liquider [the EU budget overhang], or nothing moves,” a senior EU official told The Daily Telegraph.
While they expect the December European Council to make progress, they may yet stand their ground and rely on the Brexit deadline to force up the price of the financial settlement.
One senior EU diplomat put the chances of sufficient progress at “50/50” while Donald Tusk, the European Council president, warned that consideration of what is possible will start to narrow and shift if no progress is made. “We will have to think about where we are heading” if the December deadline is missed.
How will the Conservatives react? Theresa May will face increasing pressure from Eurosceptic backbench MPS who until now have been broadly supportive of her approach. Their backing was essential in shoring up her leadership during an attempted coup after the party conference.
The December meeting of the European Council will become a crunch point. If talks do not move on, Eurosceptics could openly revolt, with Cabinet ministers including Boris Johnson, the Foreign Secretary, and Michael Gove, the Secretary of State for Environment, Food and Rural Affairs, emboldened.
The Prime Minister’s premiership will hinge on whether she can secure a breakthrough without committing to a huge Brexit divorce bill. If the EU doesn’t blink, Mrs May could find herself in trouble as markets react negatively to the growing uncertainty.
Twist: Concessions on the bill How will the European Union react?
Any concession from London is sure to be welcome, but it will be no guarantee that trade and transition talks will get the green light.
Much depends on the size of the concession. For most member states, the question of the Brexit bill looms largest. “This is not peanuts,” one senior EU diplomat said this week, “This is taxpayers’ money”.
The EU does not want Mrs May to sign up to a number, but to concede that the UK will honour commitments made during its membership. This means Eurocrats’ pensions, the EU loan book and the UK’S share of billions of euros already committed to future EU projects (roads, hospitals). The EU side is also insisting that the European Court of Justice have a role in the EU-UK withdrawal agreement. This remains a serious obstacle.
However, “sufficient progress” does not have to mean full agreement on the three issues, so some concessions could persuade the EU to talk trade, particularly as some member states worry that the process will be run into the ground by hardliners.
How will the Conservatives react?
It depends on how big the concession is. If the Prime Minister agrees, even tacitly, to a divorce bill of €60 billion there will be an explosive reaction.
Eurosceptics object to the very principle of a divorce bill, arguing the EU should be giving the UK money. Handing over such a significant amount could trigger an open revolt.
Not all Eurosceptics see the Brexit divorce bill as a red line. For some, the short-term pain outweighs the gain.
The Prime Minister could win support from the Remain wing of her party who argue that the UK needs to honour its obligations and get on with talks on a future trade deal. For them, avoiding an exit without a deal is the biggest priority.
Bust: May walks away How will the European Union react?
With horror and anger. The European Commission has always said it wants a deal and will carry the can if talks fail.
However, Brussels has a history of theatrical walkouts and even if May does go, the door would be left open for her to come back to the negotiating table, provided she did so before the March 29, 2019 Brexit Day deadline.
Brussels believes the UK will suffer far worse damage from a crash-out than the EU, and will not rush to grant concessions to bring the UK back to the table. It will just watch as business and markets react to the walkout.
The EU would expect concessions to overcome ill will created by a no-deal. The crunch will come if, faced with the reality of a chaotic Brexit, the 27 EU member states are angry enough to accept the economic damage that comes with the hardest of Brexits in order to defend the integrity of the EU.
How will the Tories react?
Eurosceptic Tory MPS would be delighted. Some have said they would cheer from the rafters if Theresa May leaves without a deal. Mr Johnson and other Eurosceptics have repeatedly said that leaving the European Union without a deal is nothing to be afraid of. For some Tories, it is the ideal result; the UK will be free to forge its own way in the world and strike deals.
For other Eurosceptics, it is a means to an end. Cabinet ministers have told the Telegraph that Britain and the EU need to have a mighty row to galvanise talks. Threatening to leave without a deal could break the deadlock.
However, the Prime Minister knows she faces the wrath of pro-european MPS and ministers. The Government has already been forced to delay the EU Withdrawal bill amid fears that Tories would rebel and block a no-deal scenario. That could well see the handful of Tory MPS prepared to rebel turn into a landslide.