BOTTOM-LINE BREXIT PART IX

What business needs to know about how Brussels sees the process of Britain leaving the European Union, as related to BCW by senior EU sources.

Don’t despair of a deal

In a follow-up to our latest update, which still holds good, Friday’s bit of choreography between EU summit chair Donald Tusk and British Prime Minister Theresa May ahead of next Wednesday’s latest “crunch” summit is intriguing. The former Polish premier has long been a diehard supporter of giving Britons the chance to back out of Brexit but his offer of a year-long “flextension” to the Article 50 withdrawal process is far from popular with EU leaders – the French were quick to brand it “clumsy” – and should be read more as a bit of help from Brussels to May’s efforts, still, to rally a parliamentary majority behind her exit deal so Britain can leave the EU soon.

The prolongation to April 12, 2020, offered by EU officials to the media just before May issued a new letter to Tusk seeking again an extension to June 30, is not a date being discussed among diplomats preparing the summit, EU sources tell us. They are more interested in the likelihood of leaders agreeing a further short extension, no longer than seven weeks. In other words, April 2020 is a headline intended to reinforce May’s threats to the pro-Brexit faction in her own Conservative party that if they still refuse to back the divorce treaty she negotiated with the EU then they risk a delay that could be fatal to the entire Brexit project – and entail Britain holding an election on May 23 to fill 73 British seats in the European Parliament that could turn into a kind of second referendum on EU membership.

Few in Brussels or the EU national capitals will hazard a guess at whether these kinds of tactics can deliver the deal in London that continental governments desperately want. They will, however, want to see some evidence from May by Wednesday that her new approach to embrace the Labour opposition and, potentially, its calls for a customs union, can work. If they don’t see that, and Britain seems as paralysed as before, expect to see only a short extension agreed, possibly to election eve on May 22, to give the EU certainty that Britain will be out, deal or no deal, before the renewal of the Union’s legislature and, subsequently, the executive Commission in the autumn.

Two key ideas are driving Brussels’ thinking: a no-deal Brexit would be painful for a European economy already showing signs of slowing amid global trade disputes; and letting Brexit drag on risks serious harm to the EU institutions, and so must be brought to an end, one way or another, in the coming few months. As before, events in London ahead of the summit will shape its outcome. But the 27 are pretty much out of patience and will not relish taking a decision that leaves further, long-standing doubt over their relations with the United Kingdom.

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