At this point in the Brexit process, pound traders have every reason to ignore optimistic headlines about Theresa May’s withdrawal deal. Time and time again, the pound has risen on reports that May might finally secure the votes she needs to pass the deal, which is broadly opposed by Brexiteers and the 10 MPs in the DUP – the Irish Unionist party that helps shore up May’s government.
And every time, hopes for May’s deal have been dashed when the MPs have reiterated their unwillingness to stomach the Irish Backstop as its currently written in the deal. And while May and members of her government have spent months pressing the EU for “legally binding assurances” that the Backstop, should it take effect, EU chief negotiator Michel Barnier has so far refused to budge.
However, now that May has officially sanctioned a series of meaningful votes later this month on her “Plan B” deal, possibly followed by a vote on a ‘no deal’ Brexit, possibly followed by a vote on whether May should press for a ‘Brexit Day’ delay (something that would require approval from the EU27, an approval that is looking increasingly likely) – the eurosceptic faction of her fractious Tory caucus may finally be willing to yield in the hopes of averting a delayed Brexit or – worse – another referendum.
The first inkling that the ERG – the coalition of roughly 70 MPs who have stymied May at every turn – might be willing to capitulate came last week when one of its leaders, Jacob Rees-Mogg, said he might be willing to accept May’s deal, so long as the EU agrees to a time limit on the backstop. Of course, the EU has insisted ad infinitum that this will never happen, but in the grinding quagmire of Brexit negotiations, every incremental softening in rhetoric is cause for celebration.
And so it is with Sunday’s big news: As May’s attorney general, Geoffrey Cox, seeks modifications to the deal that would impose a time-limit on the backstop (like his predecessors, he has met with limited success), the Sunday Times of London has reportedly obtained a copy of a “peace agreement” drawn up by the ERG that features “three tests” for May’s deal that must be met if the prime minister hopes to finally pass the withdrawal treaty and definitively rule out the possibility of a ‘no deal’ economic apocalypse.
The plan was reportedly drawn up in partnership with the DUP, which means that if May or her attorney general can finally win these concessions from Barnier, she might finally be able to pass her deal.
Its demands include:
- A “clearly worded, legally binding, treaty-level clause which unambiguously overrides” the text of the withdrawal agreement
- Language that “must go beyond simply re-emphasising/re-interpreting the temporary nature of the backstop” and a change to Cox’s legal advice that it would “endure indefinitely”
- A “clear and unconditional route out of the backstop if trade talks fail,” which could mean “a time limit or a unilateral exit mechanism.”
To be sure, the demand for a “legally binding” change to the withdrawal text is opposed by Europe, the ERG’s thinking is that, if they can help May prove to the Europeans that she could pass the deal with these changes, the EU27 might finally be willing to concede. And with Mach 29 (the day the UK will formally leave the EU) just weeks away, the pressure for concessions – which would presumably be secured at a last-minute summit one week before the deadline – is building.
But does that necessarily mean the Europeans will concede? It’s difficult to say. While Barnier has said the bloc would be willing to offer some assurances that the backstop wouldn’t last forever, the deal, as Europe sees it, remains “closed”.
A more likely outcome might be the Brexiteers finally deciding to cave and take Europe at their word once a Brexit delay looks imminent.