Brexit Bulletin: Scuppered – Bloomberg


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The dramatic outcome of a potential Brexit agreement during Theresa May's luncheon with the president of the European Commission, Jean-Claude Juncker on Monday she has only days to save an agreement, and it only gets harder.

Ireland has publicly subscribed to the agreement that it thought would be sealed on Monday. That means that any concession to make it more acceptable to the Northern Ireland party that underpins the May government will clearly be seen as a concession from Dublin. Add to that the fact that London, Scotland and Wales wanted a part of what Northern Ireland was getting: the opportunity to have access to the European single market.

It is impossible to square what the DUP wants with Dublin's demand for no border on the island and the UK's plan to leave the single market that makes the border invisible now.

Photographer: Paul Faith / AFP via Getty Images

You may need to win the Northern Irish DUP in days before returning to Brussels this week for another attempt. May and Juncker said they were confident that an agreement could be reached in time for a summit of EU leaders in mid-December to give the green light to trade negotiations for next year.

It is impossible to square what the DUP wants without borders with continental Britain, with the demand of Dublin to have no borders with the island and the UK's plan to abandon the single market that makes the border invisible now. The possible solutions are unacceptable for at least one of the parties in the debate.

The clock is advancing as never before: on Wednesday, EU diplomats will start drafting the conclusions for the summit and the commission will also evaluate the progress. On December 11, the representatives of the EU leaders sit down to prepare for the leaders' meeting and on December 12 the ministers make a final review of the conclusions.

While the UK says that the deadline is the summit, the EU has pushed against any offer of the eleventh hour. If there is no advance in December, the chances of a disorderly breakup increase and the voices on the side of the United Kingdom calling for a withdrawal will grow more.

In any case, it is not only Northern Ireland that prevented an agreement on Monday. The role of the European Court of Justice remains a point of friction, according to people familiar with the situation. It is a taboo for Brexit supporters to see it as a symbol of lost sovereignty, while the European Parliament has made it a red line that the rights of its citizens should be protected by the court.

That's why British officials continued to minimize expectations of an imminent agreement on Monday even after the EU's chief negotiator, Michel Barnier, informed European lawmakers that an agreement was imminent. The Irish Prime Minister, Leo Varadkar, was planning a statement for the journalists: the lectern had gone up before being saved hastily. Even in London, conservative lawmakers were summoned to a meeting they thought was about a big announcement. Then they were told that there was nothing to report from Brussels.

May chairs a cabinet meeting on Tuesday and may find ministers who are not very happy with their performance.

Brexit Latest

Proven Patience | The frustration of U.K. Plc for the lack of clarity Brexit intensified when the progress in the talks did not materialize, and companies reminded politicians that their planning horizons are rapidly disappearing. "For us it is imperative to start business negotiations, I would like to know immediately," said David Lenehan, general manager of Northern Industrial, a spare parts supplier based in Blackburn. "We have competitors in Europe that, if they can get parts delivered faster, then the price really does not matter," he said. "A delay of one day or half a day can be the difference between receiving an order and losing an order."

We too | Theresa May's attempt to attempt the Brexit concession in Northern Ireland ran the risk of further dismantling the United Kingdom, as regional leaders at either end of the country immediately requested similar treatment. The Scottish Prime Minister, Nicola Sturgeon, and the mayor of London, Sadiq Khan, tweeted that they would also like to remain in the single market. Wales soon followed.

Great ramifications for London if Theresa May has admitted that it is possible for part of the United Kingdom to remain within the single market and the customs union after Brexit. Londoners voted overwhelmingly for staying in the EU and a similar agreement here could protect tens of thousands of jobs.

– Sadiq Khan (@SadiqKhan) December 4, 2017

Friday gray | Retail sales in the United Kingdom recovered last month, driven by higher food spending. But non-food sales plummeted because Black Friday did not tempt enough British buyers to open their wallets. The figures suggest that households are still reluctant to spend on non-essential products given the reduction in budgets, since wages are lower than inflation and Brexit creates uncertainty for the economy.

In the markets | Although Brexit is tumbling from one obstacle to another, the pound is enjoying a growing wave of confidence among investors and badysts, writes Bloomberg's Anooja Debnath. Aberdeen Standard Investments is betting that it will recover in 2018 as the Brexit negotiations progress better than the market expects. It will also benefit from the possibility of the Bank of England raising interest rates, according to JPMorgan Asset Management. The strategists of SEB AB and Nomura International Plc also see profit possibilities.

And finally …

Jean-Claude Juncker's outfit in Brussels on Monday had a clue as to what he thought the day might bring. Typically, a UK critic and a Brexit hawk, the president of the European Commission had donned a British-looking tie for the occasion: a beige Burberry-style tartan.

Juncker and May in Brussels yesterday.

Photographer: Dario Pignatelli / Bloomberg

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