Brexit Divorce Stalemate: EU Leaders Reject UK Blueprint as Deadline Looms

By , and | September 21, 2018

Theresa May promised fresh plans to break the stalemate in Brexit negotiations after European Union leaders bluntly rejected her blueprint and warned that time is running out for striking a deal.

A two-day summit in Salzburg, Austria, broke up without progress, and leaders piled more pressure on May to shift her stance. They said a special November summit to sign the divorce agreement will only go ahead if the U.K. makes more concessions next month.

The pound dropped about 0.4 percent to $1.3220 as of 9:35 a.m. in London, paring its gain this week to just over 1 percent.

Two key roadblocks to an agreement remain: how to avoid a hard border between the U.K. and Ireland, and what the future trade relationship between Britain and the EU should look like.

“There is a lot of work to be done,” May told reporters at the end of the summit. “I believe there is a willingness to do a deal but let nobody be in any doubt — we are preparing for no deal.”

Under Pressure

The setback in Salzburg is a blow to May — and potentially to the chances of getting a deal — at a critical time for the prime minister. In 10 days she will face down her restive Conservative party at its annual conference in Birmingham, amid a growing campaign from her disillusioned colleagues for her to ditch her Brexit plans or quit.

British officials had been hoping for warmer words from European leaders at the Austrian event — to bolster May as she prepares for the conference.

Yet these hopes were largely dashed by a succession of negative verdicts on May’s proposal for a free trade area with the EU, which she drew up with her ministers at her Chequers country residence in July. With just six months left before the U.K. leaves the bloc, time for finding a solution is running short.

“Everybody shared the view that while there are positive elements in the Chequers proposal, the suggested framework for economic cooperation will not work,” European Council President Donald Tusk said. “Not least because it risks undermining the Single Market.”

Moment of Truth

Tusk warned that “the moment of truth” for Brexit will be the leaders’ summit in October, by which time there must be “maximum progress.” Only then will the EU decide if it’s worthwhile calling “an extraordinary summit in November to finalize and formalize the deal,” he said.

According to one person familiar with the matter, the special summit will be called for November 17-18 — a weekend — but leaders decided to keep it conditional on more progress in an effort to add to the pressure on May to concede further ground.

May told reporters she’d had a “frank” conversation in private with Tusk. She insisted she always knew negotiating Brexit would be “tough” and would involve the other side using hard tactics.

May said she agreed with the EU that the final deal must include a legally binding “backstop” guarantee to avoid police and customs checks at the border between Northern Ireland and the Irish Republic. But the EU’s proposal — effectively keeping the British province in the bloc’s customs territory while the rest of the U.K. goes a separate way — will never be acceptable, she said.

May’s Gambit

“That backstop cannot divide the United Kingdom into two customs territories,” May said. “We will be bringing forward our own proposals shortly.”

May would not be drawn on the details but British officials are weighing up whether to allow Northern Ireland to remain bound by EU single market regulations in areas such as food standards, while the rest of the U.K. adopts its own rules.

This option would be potentially perilous for May. Her minority government is propped up by Northern Ireland’s Democratic Unionist Party, who are opposed to any new divisions in the legal status between the province and the British mainland.

‘Liars’

As May was speaking, French President Emmanuel Macron was briefing journalists in a separate room at the Mozarteum University in Salzburg, which hosted the summit.

Macron angrily denounced those British politicians who campaigned for Brexit promising a better future as “liars” and warned that the U.K. will suffer consequences from its decision to abandon the EU. “Brexit shows us one thing: it’s not that easy to exit European Union,” Macron said. “It’s not costless, it’s not without consequences.”

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