The Scottish secretary has been urged to quit by one of his own colleagues over the draft Brexit deal. In a WhatsApp message to David Mundell, Scottish Conservative MP Ross Thomson said "no Unionist" could support the proposals. Mr Thomson said he was asking Mr Mundell "in the gentlest and strongest terms" to follow Brexit secretary Dominic Raab in quitting the cabinet. Mr Mundell has told BBC Scotland he has no intention of standing down. He has publicly backed the draft agreement, saying he was doing so on the basis that a no-deal Brexit would be "appalling" for Scotland, and urged his fellow Conservative MPS to support the prime minister. Mr Mundell has also launched a broadside against the ministers who have resigned - including Mr Raab. He said: "As someone who has stood steadfastly for keeping Scotland in the United Kingdom, I am not going to take lectures from latter-day Unionists who are now using it as merely a hook on which to hang their resignations. "The Union is far more important than people's political careers. That is why I am focused on Scotland remaining in the United Kingdom and the best way for that to happen is to ensure that we have an orderly Brexit across the whole of the United Kingdom." Mr Raab's resignation, along with those of four others including Work and Pensions Secretary Esther McVey and junior Northern Ireland minister Shailesh Vara, is a major blow for the prime minister, who announced on Wednesday evening that her cabinet had agreed the 585-page EU withdrawal document. Mr Raab backed Leave in the Brexit referendum and was closely involved in drafting the agreement, which sets out the terms of Britain's departure from the EU. In his resignation letter, he said the deal represented a "very real threat to the integrity of the United Kingdom" because of special provisions for Northern Ireland. He also said he could not accept "an indefinite backstop arrangement" for the Irish border. In his WhatsApp message to Mr Mundell, which has been seen by BBC Scotland, Mr Thomson said the backstop arrangements "mean a separate regulatory regime in Northern Ireland and that they will be more closely aligned with the EU than the UK". Mr Thomson, a prominent Brexiteer who has been highly critical of the prime minister's approach, added: "We have already seen the SNP leaping on this calling for a differential deal in Scotland. "This arrangement, I feel, is something no Unionist can support. Given that two members of the cabinet have resigned on the basis that the proposals put at risk our Union I want to urge you in the gentlest and strongest terms to follow suit." 'Incredible job'Mr Thomson also stressed that he believes Mr Mundell is a "great Secretary of State" who is doing an "incredible job", and said he would "support you in whatever you decide". Mr Mundell and Scottish Conservative leader Ruth Davidson warned Mrs May last month that they could not back any deal that "delivers a differentiated settlement for Northern Ireland", fearing it would be a political gift to the SNP and could fuel the case for Scottish independence. The Scottish government has argued that the deal would effectively allow Northern Ireland to remain in the single market while Scotland has to leave - giving it a competitive advantage that would be "devastating" for Scottish jobs and investment. It has said it will hold a symbolic vote on the proposals in the Scottish Parliament before a vote takes place in the House of Commons. The Scottish and Welsh governments have also asked the UK government for face-to-face talks over the agreement next week. First Minister Nicola Sturgeon told Holyrood that Mr Mundell and Ms Davidson would both now resign if they had any "backbone", and reiterated that the 35 SNP MPs at Westminster would vote against the deal. Scottish Labour MP Ian Murray said it was now clear that the Conservatives "are as big a threat to the integrity of the UK as the SNP". He added: "This Brexit deal has zero chance of getting through parliament and it is now imperative that the prime minister offers the public a People's Vote with the option of remaining in the EU." There are major doubts over whether Mrs May can convince enough MPs in the House of Commons to support her Brexit plan, and there have been suggestions some Tory MPs could try to force a no-confidence vote. 'National interest'Mrs May told the Commons on Thursday morning that, as prime minister of the United Kingdom, she has a "responsibility to people in every part of our country and I intend to honour that promise". And she described the draft deal as a "decisive breakthrough" in the Brexit negotiations as she urged MPs to "consider the national interest and give it their backing". Mrs May warned: "Voting against a deal would take us all back to square one. It would mean more uncertainty, more division, and a failure to deliver on the decision of the British people that we should leave the EU. "If we get behind a deal, we can bring our country back together and seize the opportunities that lie ahead." Why is David Mundell not resigning?Analysis by Sarah Smith, Scotland correspondent Given that Ms Davidson and Mr Mundell effectively threatened to resign over any deal that introduces different arrangements for Northern Ireland why are they not now considering their positions? Last night Mr Mundell seemed to interpret the deal rather differently from some of his cabinet colleagues, saying: "I was content to move to the next stage... on the basis that arrangements for Northern Ireland will not undermine the economic or constitutional integrity of the UK." How does he square that with the warnings from Mr Raab and Ms McVey that the deal threatens the integrity of the UK? Other members of the Scottish Conservative parliamentary team say they want more clarification from the PM on the Union and on future arrangements for the control of UK fishing rights. But many are likely to back the deal. The SNP have consistently argued they want Scotland to remain a member of the EU single market and customs union even if the rest of the UK leaves. The UK government maintains it would not be possible to have different arrangements for Scotland while it remains part of the UK. The worry from Scottish unionists is that allowing a separate regulatory regime for Northern Ireland undercuts that argument and allows the SNP to demand separate arrangements for Scotland. Speaking to the BBC's Good Morning Scotland programme on Thursday, the Scottish government's Brexit secretary, Mike Russell, said the prime minister was "in a mess of her own making". And he insisted the choice facing the country was not between "Mrs May's way or no deal at all". He said voting down the Brexit agreement in the House of Commons would give the government 28 days to come back with a set of alternative proposals. These could include renegotiation, single market and customs union membership, staying in the EU, a general election or a second referendum on the Brexit terms. Mr Russell said he believed the option of remaining in the EU - which the PM herself mentioned in a statement outside Downing Street after her cabinet meeting - was still "on the table". Please upgrade your browser Your guide to Brexit jargon
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A new Brexit referendum should be held if the prime minister is replaced and no general election is called, First Minister Carwyn Jones has said. He said two cabinet ministers quitting over the draft Brexit deal was one of the worst political crises he had seen. Mr Jones has previously backed the idea of a fresh referendum only if a general election failed to end the deadlock. He, and Scotland's first minister, have sent Theresa May a letter scathing of her handling of the EU withdrawal plan. Mr Jones and Nicola Sturgeon told the prime minister it was "symptomatic of the chaotic approach to the negotiations" and lacked any "meaningful engagement" with their administrations. They demanded a chance to have some input into the political declaration about future UK-EU relations before it was finalised. Speaking later to BBC Wales, Mr Jones said it was "one of the worst crises I've seen in politics, certainly in my time". "If this ends up with a leadership election in the Tory party, which just leads to a new prime minister who then carries on without any kind of mandate from the people, that would be completely wrong. "At that point if there is no election there has to be a referendum." Mr Jones added: "It's in nobody's interests to have a situation where there seems to be no leadership in the UK government or in parliament. "Businesses are starting to worry - there needs to be a way forward here that steps beyond party politics." AnalysisBy BBC Wales political editor Felicity Evans I noticed a subtle but significant change in Carwyn Jones's position on another referendum this afternoon. Until now, he's been cautious on the subject. Following the Labour line and expressing concern about the implications for devolved nations of not respecting referendum results. Today his tone was markedly different. He argued it would be "presumptuous" of politicians not to allow people "to have their say" on this new deal. The upheaval of the last 24 hours, along with the concerns he and his Scottish counterpart Nicola Sturgeon expressed in a letter this lunchtime, accusing the UK Government of a "lack of any meaningful engagement with the devolved administrations" appear to have convinced him that the balance has shifted. Mr Jones says the deal being proposed is "far from perfect" but he must be concerned that any successor to Mrs May will pursue a harder Brexit, or perhaps that the brinksmanship currently on display could lead to a no deal departure. He has previously commented that the former could shrink the Welsh economy by a tenth, and the latter would be a "catastrophe". Earlier, several Conservative backbenchers - including leading Tory Brexiteer Jacob Rees-Mogg - revealed they had submitted letters of no confidence in Mrs May to Sir Graham Brady, chairman of the Tories' backbench 1922 Committee. A vote will be triggered if 48 Tory MPs write letters to Sir Graham. It is understood 48 letters have not yet been received. But Welsh Secretary Alun Cairns said he believed "Theresa May will be here tomorrow, next week, next month and as we leave the European Union". "So far not enough letters have gone in to the 1922 committee, so we'll see what happens," he told BBC Wales. "The truth is there isn't a majority, I think, for any other leader." He earlier described the Brexit withdrawal deal as a compromise and not a cave-in to the EU. Disagreements escalated into a crisis on Thursday when Brexit Secretary Dominic Raab and Work and Pensions Secretary Esther McVey resigned in protest at the draft Brexit deal approved by the cabinet following a five-hour meeting on Wednesday. Mr Raab said he "cannot in good conscience support" proposals which he said gave the EU a "veto" over when the UK could leave a temporary customs union, and which he claimed threatened the integrity of the UK with special arrangements for Northern Ireland. Former Welsh secretary David Jones said Mr Raab was "absolutely right" to resign, saying the so-called "backstop" plan to prevent a hard border in Ireland was a "massive problem". The Clwyd West MP - also a former Brexit minister - told BBC Radio Five Live: "We are going to be effectively stuck in a customs union almost indefinitely. "The prime minister has always been clear that we can't treat Northern Ireland separately from the rest of the UK and this is what this agreement will potentially do." Later, in the House of Commons, Tory MPs lined up to condemn the draft withdrawal agreement as the prime minister delivered her statement on it. But she got support from another former Conservative Welsh Secretary, Stephen Crabb, who said "the theory of a perfect Brexit" had "met the cold reality of hard choices and compromise". "This is absolutely not the moment to walk away from our responsibilities to govern and provide this country with leadership at this difficult time," the Preseli Pembrokeshire MP said. Mrs May agreed, saying there were "difficult choices to be made ... not according to how we wish the world could be like, but to the reality of the world that we see, and to make those choices pragmatically in the interests of the British people". Plaid Cymru has confirmed it will oppose the deal, with their parliamentary leader Liz Saville Roberts lamenting it as one which "pleases none of the people, all of the time", as she repeated calls for another referendum. UKIP's leader in the Welsh Assembly, Gareth Bennett, said the plans were "a complete betrayal" of Brexit. Meanwhile the chief executive of Aston Martin - the luxury car maker which has a plant in the Vale of Glamorgan - has said the draft Brexit deal was "good enough". However, Andy Palmer added that the firm would not halt contingency planning for a no-deal scenario, saying: "The Tory party needs to agree and then Parliament needs to agree, and I don't think any of that is that easy." Read again Carwyn Jones shifts Brexit poll stance as crisis deepens : https://ift.tt/2zcOcCRUpdated at 1:22 p.m. ET Already reeling from a string of protests and resignations, British Prime Minister Theresa May is fighting for more than the draft Brexit deal she has negotiated with the European Union. With a mutiny afoot within her own Conservative Party, the prime minister may be battling for her political life, as well. "Regrettably, the draft Withdrawal Agreement presented to Parliament today has turned out to be worse than anticipated and fails to meet the promises given to the nation by the Prime Minister, either on her own account or on behalf of us all in the Conservative Party Manifesto," Jacob Rees-Mogg said in a letter requesting a vote of no-confidence on May. Rees-Mogg leads the European Research Group, a hard-line faction within the Conservative Party that has pushed for as much distance as possible between Britain and the EU. At least two other Conservative members of Parliament, Henry Smith and Sheryll Murray, also submitted letters of no-confidence Thursday. Graham Brady, the chair of a committee of backbench Conservatives, must receive 48 letters before such a vote is triggered within the party. It remains unclear whether Rees-Mogg and his fellow Brexiteers will have the numbers to do so.
Whatever the result of Rees-Mogg's push, it's a sign that things aren't going as planned for May, who unveiled the 585-page draft text earlier this week after months of hard-fought negotiations. The tentative deal charts a course for the U.K. when it leaves the EU in March 2019. It includes controversial solutions to some particularly difficult problems, foremost among them the status of Northern Ireland, which is part of the U.K. and shares an open land border with the Republic of Ireland, an EU member. Under the draft deal, Northern Ireland would largely remain in the European Union's single market allowing free movement of goods and services and thus remain subject to EU regulations. That's a nonstarter for critics including May's key Northern Irish allies, the Democratic Unionist Party. "I know it's been a frustrating process. It has forced us to confront some very difficult issues. But a good Brexit — a Brexit, which is in the national interest — is possible," May told the House of Commons on Thursday. "We have persevered and have made a decisive breakthrough." "Voting against a deal," she added, "would take us all back to square one." Despite the collective backing of her Cabinet, several of her close allies made clear that they do not support the draft agreement. Among those to resign in protest were Work and Pensions Secretary Esther McVey and Brexit Secretary Dominic Raab — the second Brexit secretary to quit in dramatic fashion this year. And a handful of junior ministers have also joined them in bowing out. Raab told the BBC that the deal May worked out contains too many provisions that would leave the U.K. subject to EU regulations "with no say over the rules and the laws being applied, with no exit mechanism." "I think that would be damaging for the economy," he said, "but devastating for public trust in our democracy." The political turmoil has already taken a noticeable economic toll, helping to send the British pound into a skid Thursday. At one point, the currency had tumbled more than 1 percent against the U.S. dollar following news of the high-level resignations. The tumult within the Conservative Party — many of whose members had campaigned for Brexit — has opened a window for political rivals still upset with the results of the fateful 2016 referendum. Many of them have leaped at the opportunity to reassess the situation and retake the vote — now with the benefit of having seen the tumult of the first go-round. "The thing I think people need to remember from Theresa May's extraordinary statement last night is she conceded that it isn't a choice between no deal and this deal; it's a choice between no deal, this deal and not doing Brexit," MP Owen Smith of the opposition Labour Party told the BBC. "The only way in which she gets out of this with any dignity," Smith added, "is by going back to the people and holding another vote in order to determine whether they want this poor deal." The government in Scotland, whose voters cast ballots overwhelmingly against Brexit, called the draft deal "essentially dead" in a statement Thursday. "Brexit isn't a better future — it is a backward step into an imagined past," said Scottish Government Business and Constitutional Relations Secretary Michael Russell. "We must acknowledge that this deal is unacceptable to Scotland and her citizens. It therefore cannot be supported by this Government." The first ministers of both Wales and Scotland, Carwyn Jones and Nicola Sturgeon, respectively, also submitted a letter Thursday requesting an urgent meeting to discuss the agreement next week. "If this ends up with a leadership election in the [Conservative] Tory party, which just leads to a new prime minister who then carries on without any kind of mandate from the people, that would be completely wrong," Jones told the BBC. "At that point if there is no election there has to be a referendum." Initial polling appears to throw weight behind the deal's critics. At least one initial poll of British voters suggested that the number of people opposed to the deal more than double the number of supporters. Another poll found that a majority now prefer to stay in the EU altogether.
Asked Thursday about the possibility of another vote, May rejected the notion outright. "Most members of Parliament recognize that they gave a vote to the British people. The British people voted, and it's up to us to deliver on that vote and not have a second referendum," she said at a news conference after addressing lawmakers. Meanwhile, beyond the U.K.'s borders, reaction to the draft deal has been considerably more subdued. Irish Prime Minister Leo Varadkar said that, while Brexit is "something we regret," the agreement reflects that May "has been true to her word" in honoring the terms of the 20-year-old peace deal known as the Good Friday Agreement. European Council President Donald Tusk, too, offered what seemed backhanded words of support for the tentative deal on Thursday. "Since the very beginning, we've had no doubt that Brexit is a lose-lose situation and that our negotiations are only about damage control," he said in Brussels. "As much as I am sad to see you leave," Tusk added, "I will do everything to make this farewell the least painful possible for both you and for us." As for the political pain May is experiencing in the U.K., the prime minister had a simple answer: "Leadership is about taking the right decisions, not the easy ones." "I believe that this is a deal which does deliver that which is in the national interest," May added. "And am I going to see this through? Yes." Read again UK Wracked By Political Turmoil As Top Ministers Reject Draft Brexit Deal : https://ift.tt/2QGobCN
Dramatic market reaction to the resignation of key UK government ministers on Thursday underscores the steep price that Brits are likely to pay if the country crashes out of the European Union without a divorce deal.
The resignations mean that Prime Minister Theresa May is unlikely to gain parliamentary support for the Brexit deal she has negotiated with the European Union. The risk of a chaotic exit from the bloc has risen sharply as a result.
The pound fell as much as 2% against the dollar to below $1.28 before trimming those losses slightly after May said she would fight to save her deal. Shares in UK banks declined sharply, with Lloyds (LYG) and Barclays (BCS) shedding over 4% and Royal Bank of Scotland dropping nearly 10%.
"That's quite a serious escalation and the markets are reacting very violently, [because] the risks of a more disorderly situation are increasing and are very material," said John Wraith, head of UK rates strategy at UBS.
Wraith said the United Kingdom will plunge into recession next year if the government fails to secure an orderly break with its largest trading partner. He predicted the UK economy would be up to 10% smaller in 2023 than if the country had remained in the European Union.
"It's a big number, but it is a big problem," he said.
The fear is that Britain could tumble out of the European Union without a transition deal to keep it temporarily inside the bloc's market for goods and services and customs union.
That would mean new trade barriers, and disruption to supply chains for food, medicines and manufactured goods. Analysts expect a sharp decline in business confidence, real estate prices and an even weaker pound. Airlines may not be able to fly.
The International Monetary Fund warned Wednesday that a disorderly exit would "lead to widespread disruptions in production and services." Rating agency S&P has told Brits to expect "a short, sharp recession."
"Nobody can be sure of the extent of any hit to activity, but we think it could be as high as 3% of GDP, with an outright recession probable," wrote analysts at research firm Capital Economics.
Companies have raced to prepare for the worst as negotiations dragged on in recent months. The United Kingdom is due to leave the European Union on March 29, 2019, but the prolonged talks left businesses in the dark on terms of future trade.
BMW (BMWYY) has made plans shut its Mini factory in England for one month of maintenance immediately after Brexit because it can't be sure of getting the parts it needs. Pharmaceutical companies are stockpiling medicines.
Financial services firms are likely see their access to EU markets reduced under any Brexit scenario, but a messy exit would be most dangerous.
Households would also be harmed by a chaotic Brexit. The value of the pound would slump further, hiking the cost of imported products. Inflation would rise.
S&P estimated that annual household incomes would drop by £2,700 ($3,440) on average in each of the three years following a messy breakup.
The IMF warned that a decline slump in the value of the pound would hit consumer and business confidence.
"[That] in turn would have adverse impact on the balance sheets of households, firms and financial intermediaries," it said.
Bank shares were particular hard hit on Thursday because of worries that borrowers would struggle to pay back loans if the economy slumps following a messy Brexit.
RBS, for example, has already set aside £100 million ($125 million) to cover the fallout from Brexit.
While a recession is likely under the worst Brexit scenario, the United Kingdom would probably dodge a financial crisis.
"The UK banking system is incredibly resilient and well capitalized," said Wraith. "If you look at the stress tests they all passed — they include way worse scenarios than we envision even in the worst case Brexit scenario."
Updated at 1:22 p.m. ET Already reeling from a string of protests and resignations, British Prime Minister Theresa May is fighting for more than the draft Brexit deal she has negotiated with the European Union. With a mutiny afoot within her own Conservative Party, the prime minister may be battling for her political life, as well. "Regrettably, the draft Withdrawal Agreement presented to Parliament today has turned out to be worse than anticipated and fails to meet the promises given to the nation by the Prime Minister, either on her own account or on behalf of us all in the Conservative Party Manifesto," Jacob Rees-Mogg said in a letter requesting a vote of no-confidence on May. Rees-Mogg leads the European Research Group, a hard-line faction within the Conservative Party that has pushed for as much distance as possible between Britain and the EU. At least two other Conservative members of Parliament, Henry Smith and Sheryll Murray, also submitted letters of no-confidence Thursday. Graham Brady, the chair of a committee of backbench Conservatives, must receive 48 letters before such a vote is triggered within the party. It remains unclear whether Rees-Mogg and his fellow Brexiteers will have the numbers to do so.
Whatever the result of Rees-Mogg's push, it's a sign that things aren't going as planned for May, who unveiled the 585-page draft text earlier this week after months of hard-fought negotiations. The tentative deal charts a course for the U.K. when it leaves the EU in March 2019. It includes controversial solutions to some particularly difficult problems, foremost among them the status of Northern Ireland, which is part of the U.K. and shares an open land border with the Republic of Ireland, an EU member. Under the draft deal, Northern Ireland would largely remain in the European Union's single market allowing free movement of goods and services and thus remain subject to EU regulations. That's a nonstarter for critics including May's key Northern Irish allies, the Democratic Unionist Party. "I know it's been a frustrating process. It has forced us to confront some very difficult issues. But a good Brexit — a Brexit which is in the national interest — is possible," May told the House of Commons on Thursday. "We have persevered and have made a decisive breakthrough." "Voting against a deal," she added, "would take us all back to square one." Despite the collective backing of her Cabinet, several of her close allies made clear that they do not support the draft agreement. Among those to resign in protest were Work and Pensions Secretary Esther McVey and Brexit Secretary Dominic Raab — the second Brexit secretary to quit in dramatic fashion this year. And a handful of junior ministers have also joined them in bowing out. Raab told the BBC that the deal May worked out contains too many provisions that would leave the U.K. subject to EU regulations "with no say over the rules and the laws being applied, with no exit mechanism." "I think that would be damaging for the economy," he said, "but devastating for public trust in our democracy." The political turmoil has already taken a noticeable economic toll, helping to send the British pound into a skid Thursday. At one point, the currency had tumbled more than 1 percent against the U.S. dollar following news of the high-level resignations. The tumult within the Conservative Party — many of whose members had campaigned for Brexit — has opened a window for political rivals still upset with the results of the fateful 2016 referendum. Many of them have leaped at the opportunity to reassess the situation and retake the vote — now with the benefit of having seen the tumult of the first go-round. "The thing I think people need to remember from Theresa May's extraordinary statement last night is she conceded that it isn't a choice between no deal and this deal; it's a choice between no deal, this deal and not doing Brexit," MP Owen Smith of the opposition Labour Party told the BBC. "The only way in which she gets out of this with any dignity," Smith added, "is by going back to the people and holding another vote in order to determine whether they want this poor deal." The government in Scotland, whose voters cast ballots overwhelmingly against Brexit, called the draft deal "essentially dead" in a statement Thursday. "Brexit isn't a better future — it is a backward step into an imagined past," said Scottish Government Business and Constitutional Relations Secretary Michael Russell. "We must acknowledge that this deal is unacceptable to Scotland and her citizens. It therefore cannot be supported by this Government." The first ministers of both Wales and Scotland, Carwyn Jones and Nicola Sturgeon, respectively, also submitted a letter Thursday requesting an urgent meeting to discuss the agreement next week. "If this ends up with a leadership election in the [Conservative] Tory party, which just leads to a new prime minister who then carries on without any kind of mandate from the people, that would be completely wrong," Jones told the BBC. "At that point if there is no election there has to be a referendum." Initial polling appears to throw weight behind the deal's critics. At least one initial poll of British voters suggested that the number of people opposed to the deal more than double the number of supporters. Another poll found that a majority now prefer to stay in the EU altogether.
Asked Thursday about the possibility of another vote, May rejected the notion outright. "Most members of Parliament recognize that they gave a vote to the British people. The British people voted, and it's up to us to deliver on that vote and not have a second referendum," she said at a news conference after addressing lawmakers. Meanwhile, beyond the U.K.'s borders, reaction to the draft deal has been considerably more subdued. Irish Prime Minister Leo Varadkar said that, while Brexit is "something we regret," the agreement reflects that May "has been true to her word" in honoring the terms of the 20-year-old peace deal known as the Good Friday Agreement. European Council President Donald Tusk, too, offered what seemed backhanded words of support for the tentative deal on Thursday. "Since the very beginning, we've had no doubt that Brexit is a lose-lose situation and that our negotiations are only about damage control," he said in Brussels. "As much as I am sad to see you leave," Tusk added, "I will do everything to make this farewell the least painful possible for both you and for us." As for the political pain May is experiencing in the U.K., the prime minister had a simple answer: "Leadership is about taking the right decisions, not the easy ones." "I believe that this is a deal which does deliver that which is in the national interest," May added. "And am I going to see this through? Yes." Read again UK Wracked By Political Turmoil As Top Ministers Reject Draft Brexit Deal : https://ift.tt/2QGobCN[unable to retrieve full-text content] [unable to retrieve full-text content] Breaking News EmailsGet breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings. / Updated By Alastair Jamieson LONDON — Britain's Brexit divorce deal with Europe was all but dead Thursday — barely a day after it was published — as ministers quit Prime Minister Theresa May's government in protest. The draft agreement, which follows 20 months of negotiations between London and Brussels, has infuriated lawmakers, including some in May's own divided Conservative party who publicly called for her ouster. Dominic Raab, the Brexit secretary, said May's proposals could lead to the constitutional breakup of the United Kingdom. He became the second Brexit secretary to quit in less than six months, and his departure sent the British pound plunging on currency markets. The drama came only hours after May claimed to have secured the backing of her Cabinet — and before she faced angry questions in the House of Commons. With support ebbing away, May might face an internal leadership contest in her Conservative Party that could see her replaced as party chief and prime minister. Jacob Rees-Mogg, a prominent and staunch pro-Brexit Conservative, called for May to be removed. There are only 134 days left until Britain’s official departure, and time is running out for the country to reach some kind of customs agreement with the E.U., its biggest trading partner. Without it, Britain could face chaos at borders and ports — a scenario that has prompted the stockpiling of food and medicines. But an increasing number of lawmakers now believe a “no-deal” would be better than May’s proposal. "We're in the Brexs**t,” read Thursday's front page in The Sun, Britain's bestselling tabloid newspaper. Can the Brexit deal survive?Getting any deal through Parliament was always going to be difficult for May, who needs the votes of about 320 of the 650 lawmakers to support the agreement. The Conservatives are a minority government that is propped up by members of Northern Ireland’s Democratic Unionist Party (DUP). But the DUP will not back any deal that treats the British province differently from the rest of the United Kingdom, and the main opposition Labour Party said Thursday it would also vote against the plan. A former minister, Iain Duncan Smith, said Raab’s departure would likely kill the deal and could even lead to May’s ouster in a party leadership challenge. “The very man who was effectively her main negotiator — for him to resign I think is devastating,” he said. “He’s been aware of all these things and has clearly been raising the alarm, and it sounds like he has been ignored. The reality is that the deal looks very dodgy.” May could still salvage her deal if she can sell it to the House of Commons, and appears determined to stick around. “She is a fighter, to put it mildly,” said Robert Peston, political editor of NBC News' British partner ITV News. He believes rebel lawmakers hope the threat of a leadership challenge will force her to change her mind on the deal. “We’ll see,” said Peston. “What is on public display is a Conservative Party at war with itself beyond anything I’ve ever witnessed.” What are the sticking points in the deal?At the heart of the current stalemate is the state of the post-Brexit border between Ireland — an E.U. member — and Northern Ireland, one of the four nations that make up the U.K. The border region has been the focus of deadly violence in the past, and, after the March 29 Brexit deadline, it will be the only land border between the E.U. and Britain. All sides agree there should be no customs checks or other infrastructure on the border — a key condition of a 1998 peace deal — but there is no agreement on how and where those checks should take place. Another sticking point in talks has been Britain's insistence that any E.U.-aligned customs arrangement must be temporary. The E.U. says that, in order to guarantee an open border, it can't have a time limit. May's draft plan reportedly involves a "swimming pool" solution in which there would be no hard border but Northern Ireland would face deeper levels of regulation in order to allow frictionless trade with Ireland. It means Northern Ireland will remain bound by E.U. laws on sales tax, farm subsidies and state aid — something unacceptable to many Conservatives. Shailesh Vara, who was the first minister to quit Thursday, said: “It is a sad day when we are reduced to obeying rules made by other countries who have shown they do not have our best interests at heart. We can and must do better than this." What else is in the deal?The draft deal seeks a smooth divorce from the rest of the E.U. Without it, Britain would have to restore full border controls at its ports facing France, with the likelihood of huge delays in the supply along key trading routes. The deal proposes an emergency fix to ensure no return of a hard border on Ireland, and keeps the status quo until the end of 2020, with an option to extend it once. Access to fisheries would be renegotiated separately, and there would be some checks on goods crossing from mainland Britain to Northern Ireland to ensure compliance with E.U. standards. The E.U.’s top court, the European Court of Justice, would remain the ultimate arbiter for issues specified in a finalized deal. What happens next?May hopes to calm the anger and press ahead. She told lawmakers that her plan was "in the national interest" and, more important, was likely the only feasible deal. "The choice is clear: We can choose to leave with no deal, we can risk no Brexit at all, or we can choose to unite and support the best deal that can be negotiated," she said. The deal requires the consent of the European and British parliaments, and E.U. chief negotiator Michel Barnier was set to travel to Strasbourg, France, to win over legislators there. The European Parliament's chief Brexit official, Guy Verhofstadt, has already welcomed the draft withdrawal agreement. E.U. leaders will also meet Nov. 25 to endorse the deal. "If nothing extraordinary happens, we will hold a European Council meeting in order to finalize and formalize the Brexit agreement," European Council President Donald Tusk said.
Dramatic market reaction to the resignation of key UK government ministers on Thursday underscores the steep price that Brits are likely to pay if the country crashes out of the European Union without a divorce deal.
The resignations mean that Prime Minister Theresa May is unlikely to gain parliamentary support for the Brexit deal she has negotiated with the European Union. The risk of a chaotic exit from the bloc has risen sharply as a result.
The pound fell as much as 2% against the dollar to below $1.28 before trimming those losses slightly after May said she would fight to save her deal. Shares in UK banks declined sharply, with Lloyds (LYG) and Barclays (BCS) shedding over 4% and Royal Bank of Scotland dropping nearly 10%.
"That's quite a serious escalation and the markets are reacting very violently, [because] the risks of a more disorderly situation are increasing and are very material," said John Wraith, head of UK rates strategy at UBS.
Wraith said the United Kingdom will plunge into recession next year if the government fails to secure an orderly break with its largest trading partner. He predicted the UK economy would be up to 10% smaller in 2023 than if the country had remained in the European Union.
"It's a big number, but it is a big problem," he said.
The fear is that Britain could tumble out of the European Union without a transition deal to keep it temporarily inside the bloc's market for goods and services and customs union.
That would mean new trade barriers, and disruption to supply chains for food, medicines and manufactured goods. Analysts expect a sharp decline in business confidence, real estate prices and an even weaker pound. Airlines may not be able to fly.
The International Monetary Fund warned Wednesday that a disorderly exit would "lead to widespread disruptions in production and services." Rating agency S&P has told Brits to expect "a short, sharp recession."
"Nobody can be sure of the extent of any hit to activity, but we think it could be as high as 3% of GDP, with an outright recession probable," wrote analysts at research firm Capital Economics.
Companies have raced to prepare for the worst as negotiations dragged on in recent months. The United Kingdom is due to leave the European Union on March 29, 2019, but the prolonged talks left businesses in the dark on terms of future trade.
BMW (BMWYY) has made plans shut its Mini factory in England for one month of maintenance immediately after Brexit because it can't be sure of getting the parts it needs. Pharmaceutical companies are stockpiling medicines.
Financial services firms are likely see their access to EU markets reduced under any Brexit scenario, but a messy exit would be most dangerous.
Households would also be harmed by a chaotic Brexit. The value of the pound would slump further, hiking the cost of imported products. Inflation would rise.
S&P estimated that annual household incomes would drop by £2,700 ($3,440) on average in each of the three years following a messy breakup.
The IMF warned that a decline slump in the value of the pound would hit consumer and business confidence.
"[That] in turn would have adverse impact on the balance sheets of households, firms and financial intermediaries," it said.
Bank shares were particular hard hit on Thursday because of worries that borrowers would struggle to pay back loans if the economy slumps following a messy Brexit.
RBS, for example, has already set aside £100 million ($125 million) to cover the fallout from Brexit.
While a recession is likely under the worst Brexit scenario, the United Kingdom would probably dodge a financial crisis.
"The UK banking system is incredibly resilient and well capitalized," said Wraith. "If you look at the stress tests they all passed — they include way worse scenarios than we envision even in the worst case Brexit scenario."
The EU says much work still needs to be done on Brexit, despite agreeing a draft withdrawal document with the UK. "We still have a long road ahead of us on both sides," chief negotiator Michel Barnier said. The EU has set out a series of meetings leading to one on 25 November where it plans to approve the Brexit agreement. UK Prime Minister Theresa May has won the backing of her cabinet but faces a tough task getting the agreement approved by Parliament. A sign of that came on Thursday morning when Mr Barnier's UK counterpart, Brexit Secretary Dominic Raab, resigned saying he could not "in good conscience" support the agreement. He was one of four ministers to quit. Mrs May later defended the deal in the House of Commons, telling MPs it delivered on the Brexit referendum and provided for an orderly withdrawal. What has the EU said and what happens next?Mr Barnier was speaking on Thursday morning alongside EU Council head Donald Tusk as the chief negotiator formally handed over the 585-page draft withdrawal agreement. Mr Barnier said the agreement was fair and balanced, took into account the UK's needs and laid the ground for an "ambitious new partnership". Mr Tusk praised Mr Barnier's work and said the agreement had "secured the interests of the 27 member states and EU as a whole". He laid out the timetable for the days ahead.
Mr Tusk said: "Since the very beginning, we have had no doubt that Brexit is a lose-lose situation, and that our negotiations are only about damage control." Addressing the UK, he added: "As much as I am sad to see you leave, I will do everything to make this farewell the least painful possible, for you and for us." Mr Barnier later took the document to the European Parliament. Its president, Antonio Tajani, said MEPs would vote on the deal in early 2019. If the agreement is approved by both sides, a 21-month transition period will kick in, during which a trade deal and the thorny issue of how to ensure there is no physical border between Northern Ireland - part of the UK - and the Republic of Ireland will need to be worked out. A smooth border-free exchange underpins the peace deal that ended the Northern Ireland conflict. The document from the EU sideThe draft withdrawal agreement covers so-called "divorce" issues as the UK prepares to leave the EU. It includes a "financial settlement" from the UK, thought to be about £39bn (€45bn; $50bn). Speaking at a press briefing in Brussels on Wednesday, Mr Barnier addressed one of the major concerns of the divorce, the Irish "hard border" issue. He said that to avoid the need for physical checks on goods or infrastructure at the border between Northern Ireland and the Republic of Ireland, the EU would work with the UK to agree a trade deal. However if talks fail, the so-called "backstop" measure would be used. Both sides have resolved to ensure the backstop is not necessary by coming up with alternative arrangements. Please upgrade your browser Your guide to Brexit jargon"If we are not ready by 2020, we can extend the provision so we have more time, and if we are still not there with the future agreement after this, the backstop agreement would kick in," he said. "There will be a UK-wide single customs territory which Northern Ireland will remain in, and Northern Ireland will remain aligned to the rules of a single market essential for avoiding a border including on agriculture policy." The draft withdrawal agreement states that the transition period may be extended by mutual consent. Mr Barnier said that any extension would by a one-off, "by a limited period and by joint agreement". During the transition, the UK will be out of the EU. It will have no voting rights but will continue to abide by the majority of its rules. There are also special protocols in place for Gibraltar and Cyprus to enable people there "to continue to live as they do today", Mr Barnier added. Spain has longstanding claims to the British Overseas Territory of Gibraltar and the deal sets out bilateral co-operation on customs, policing, trade, taxation and citizens' rights. The UK has sovereign military bases in Cyprus. EU law will continue to apply at the bases, with the deal securing the rights of the 11,000 Cypriot civilians working there. Skilled swerveAnalysis by BBC Europe editor, Katya Adler The EU knows there is a very real possibility the Brexit deal could be voted down by the UK Parliament in a few weeks' time. I put the question to Michel Barnier on Wednesday night at his press conference - but, skilled politician that he is, he refused to engage. Brussels is very keen indeed not to give the impression that the EU might change or come up with a "better" Brexit deal text if this one ends up being rejected in the House of Commons. Mr Barnier quoted Theresa May as saying that this is a deal in the UK's interest. How have other European leaders reacted?German Chancellor Angela Merkel on Thursday welcomed the draft agreement, saying: "I am very happy that, after lengthy and not always easy negotiations, a proposal could be reached." The European Parliament's Brexit chief Guy Verhofstadt said the deal had been hammered out after two years of "intense negotiations" and he hoped UK MPs would accept that "there is not a lot of room [for] manoeuvre to say, 'OK, let's start again'". French Finance Minister Bruno Le Maire said the deal was "good news for the French economy" but also issued caution, saying the UK must be made to respect all EU rules. Finland's Prime Minister Juha Sipila tweeted to say that while Wednesday's developments were important, "decisions on both sides are still needed for a final agreement". Austrian Chancellor Sebastian Kurz said he was "very pleased", adding: "The result is a good one." Read again Brexit: Draft agreement a 'decisive' step forward, says Barnier : https://ift.tt/2DEmFOF |
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