May in search of a third way

The UK government went into the second phase of Brexit talks on the future relationship with the EU touting two proposals for customs and trade, propped up by a ‘backstop’ plan to prevent a hard border in Ireland.

Theresa May goes into Friday’s crunch cabinet meeting with the EU having rejected both her suggestions. Among her own ministers and MPS, the situation is even more difficult - all three plans are unacceptable. Will the ‘third way’ rumoured to be under development in Number 10 win any of them round?

The Prime Minister’s preferred option was a complicated ‘customs partnership’, which would have seen EU tariffs levied from companies trading with the UK, and then refunded to those who didn’t then ship their goods on to the continent.

Earlier this year, Downing Street sources called this plan “intellectually perfect”, but it was dismantled both by Brussels, which dismissed it as “magical thinking”, and by Brexiteers on the Tory benches, who fear it will lock the UK into EU rules. At the weekend, the leader of the House of Commons Andrea Leadsom suggested it would be too “complicated”.

The other option, dubbed ‘maximum facilitation’ or ‘max fac’, is a technological customs frontier with number plate recognition and digital manifests doing the heavy lifting of customs checks. However, Dublin pointed out that cameras are the kind of physical infrastructure the UK promised not to install along the Irish border, and Business Secretary Greg Clark has warned that the technology will take a long time to get ready likely beyond the December 2020 cutoff for the postbrexit transition phase.

A middle-ground plan will likely seek to bridge the gap in cabinet, but with Brussels sensing it has the upper hand in talks, any bespoke solution may be out.