Fault-lines in the ruling Conservative party are threatening to make a mess of the U.K.’s Brexit negotiations, raising the risk that business will face what it fears will be the worst-case scenario when the country leaves the EU in March 2019.
A caucus of some 60 hard-line backbenchers is preparing to break openly with the government’s declared strategy of trying to soften the blow of leaving the EU’s single market by arranging a transitional period, during which which the U.K. would still pay into the EU’s budget and not be able to sign its own trade deals. Without such a deal, key industries from finance and airlines to automakers and food and drink producers could find themselves exposed to “cliff-edge” effects in April 2019, unable to do business with their biggest trading partner.
Such fears have driven the British pound down to an eight-year low against the euro and pushed up inflation in recent months. The U.K. economy, which went into last year’s referendum as the fastest-growing in the G7, is now the slowest-growing in the group.
The hardline Brexiteers said in a letter drafted for publication on Sunday that “in short, when we leave in 2019 we need to make sure we are well and truly out.” The argument reflects a widespread fear that arrangements styled as makeshift could well turn out to be permanent. Embarrassingly for the government, the group of MPs associated with the latest revolt includes Suella Fernandes and Steve Baker, respectively senior aides to Treasury chief Philip Hammond and to the U.K.’s chief Brexit negotiator David Davis. Hammond and Davis both support a transitional arrangement. Both Fernandes and Baker denied that they planned to sign the letter, the existence of which was first reported Thursday by the BBC.
But May is also facing pressure from the many pro-Remain lawmakers in her ranks, who are up in arms over a new ‘EU Withdrawal’ bill that will effectively allow the government sweeping powers to change laws already in force without consulting parliament, once the U.K. leaves the EU. Dominic Grieve, who was attorney-general under May’s predecessor David Cameron, has called the bill an “astonishing monstrosity.”
Since May’s election gamble backfired, the Conservatives have only a one-seat majority in parliament thanks to a tactical deal with Northern Irish unionists. That means that either wing of the party can make or break the current government. Small wonder that the latest round of talks in Brussels ended with the EU’s negotiating team accusing it of backsliding, and with the EU’s top bureaucrat Jean-Claude Juncker openly doubting the “stability and accountability” of Davis and mocking his “apparent lack of involvement.”