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Brexiteers May Tolerate Boris Johnson’s Deal

Ian Wishart, Nikos Chrysoloras and Alexander Weber
Brexiteers May Tolerate Boris Johnson’s Deal

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European leaders are getting ready to gather in Brussels to clinch a deal that will see the U.K. part ways with the European Union. There are signs an agreement can be reached after progress on the stubborn sticking point of the customs border with Ireland. But issues remain, specifically relating to the levying of sales tax.

Democratic Unionist Party Leader Arlene Foster dismissed as “nonsense” a report that her party was close to dropping its opposition to Boris Johnson’s latest proposals. The prime minister will need the DUP’s support if he is to get a deal through Parliament.

Must read: Will U.K. Parliament Back a Boris Johnson Brexit? We Do the Math

Key Developments

EU Chief Negotiator Michel Barnier briefed EU27 diplomats in Brussels that agreement has yet to be reachedJohnson needs a deal approved this Saturday or he will be told to seek an extension; that will likely prompt a legal battle with the risk of a no-deal exit

Sales Tax Is Final Sticking Point in Talks (10:03 p.m.)

Negotiators have agreed on all the outstanding issues except how to handle sales tax, according to one EU diplomat, and that will require Johnson’s approval.

Another obstacle though is that there is still no legal text. Several ambassadors are worried that it might not be ready for the summit that begins Thursday and it will be difficult for EU leaders to sign off if their advisers haven’t had time to vet it.

Negotiators Seek to Reach Deal Before Summit (8:05 p.m.)

EU negotiators haven’t thrown in the towel on getting the deal done before the summit, according to an EU diplomat. Talks are ongoing with the goal of reaching an agreement, presenting the legal text to the working group of EU27 Brexit diplomats, then to ambassadors, and wrapping up everything in time for the meeting of EU leaders, the diplomat said.

‘We Are Working,’ Barnier Says (7:50 p.m.)

EU chief Brexit negotiator Michel Barnier briefed the bloc’s ambassadors in Brussels for 75 minutes on the state of the talks.

He told diplomats the outstanding technical issue is how to collect Value Added Tax in Northern Ireland if the U.K. decides to have a different rate from the EU after Brexit, an official said. The EU is surprised that this has suddenly become the biggest sticking point, according to the official said.

“We are working,” Barnier told reporters as he left the meeting. Talks are continuing.

Legal Activist Threatens Another Challenge (7:30 p.m.)

Jolyon Maughan, the lawyer who took on the government over suspending Parliament and won, is threatening to throw another legal spanner in the works.

He says he plans to seek an injunction against the government to stop it putting the Brexit Withdrawal Agreement before Parliament. He claims it breaks a law passed last year that makes it illegal to put Northern Ireland in a separate customs union.

If successful, he says Johnson will have to request an extension under the Benn Act.

Barnier: Issues Remain Open in Talks (7 p.m.)

Michel Barnier briefed EU government envoys in Brussels that a deal has yet to be reached, as some issues remain open, two diplomats familiar with the meeting said.

The EU’s Brexit negotiator insisted he is optimistic a deal is still possible, one of the officials said. It’s still unclear which exactly are the open issues and which are the next steps. Talks will continue tonight, they said.

Two U.K. officials also played down the chances of an agreement tonight, saying it is unlikely.

Macron ‘Wants to Believe’ Deal Being Finalized (5:45 p.m.)

Two of the big players in the Brexit saga were meeting in Toulouse, France: France’s Emmanuel Macron and Germany’s Angela Merkel. Their backing is critical to any deal and they are headed to the summit tomorrow.

Their words were being mined for meaning and immediately were open to interpretation. Macron said he “wants to believe” in a Brexit deal for tonight, a positive push as talks are in their final hours. Some took his words to mean a deal is being finalized.

“We have also prepared the EU council that will be held tomorrow and Friday, on topics such as budget, enlargement and of course Brexit, on which I want to believe that a deal is being finalized and that we will be able to see tomorrow,” he said during a joint press conference with Merkel.

Merkel, for her part, remarked that “the news we’re hearing from Brussels could be worse” and "now we’re in the final meters.” She said she’ll keep her fingers crossed.

The fact that neither leader was openly pessimistic is a sign things could be moving towards an agreement.

Brexiteers May Tolerate Johnson Deal (4:45 p.m.)

Boris Johnson briefed his cabinet and backbenchers from his Conservative Party on the progress of negotiations in Brussels in two short meetings, telling them work still needs to be done.

Steve Baker, chairman of the ERG group of hardline Brexiteer Tory MPs, said “the deal sounds like it could well be tolerable” after Johnson spoke to rank-and-file lawmakers in an eight minute private meeting. “It’s not our job to be more unionist than the DUP. But we’re not going to delegate our decision,” he said in reference to the group’s concerns about customs arrangements for Northern Ireland.

Johnson said “the summit is still shrouded in mist,” according to Baker’s account after he left the meeting. “Until there’s a legal text we’re not going to make a decision,” Baker added.

Johnson had earlier told cabinet that there is a chance of a good deal but it’s not there yet, his spokesman James Slack told reporters.

Legal Text Needed Tonight, EU Diplomat Says (4:30 p.m.)

An EU diplomat told reporters in Brussels that if there’s no agreed legal text tonight, there’s no chance that a deal will be struck at the leaders’ summit on Thursday.

What will happen in that case, whether it’s a new summit, will depend on the outcome of talks in the meantime, the diplomat said.

All this is now a negotiation between London and Belfast, the diplomat said, adding that it’s a situation he finds “very boring.”

DUP Criticizes Varadkar’s Consent Comments (4:05 p.m.)

Irish Prime Minister Leo Varadkar’s comments on restoring the devolved assembly in Northern Ireland were an “unhelpful intervention” a DUP lawmaker said, in the latest sign of strained relations between the party and the Dublin government.

Reviving the assembly in Stormont is “entirely a matter for the parties in Northern Ireland and the U.K. Government,” said Paul Givan, a DUP lawmaker in the currently inactive assembly. "The Irish Government has no role in this area."

Earlier Varadkar said the assembly’s consent mechanism should be re-examined as part of efforts to revive the body (see 1:05 p.m.).

Barnier’s Debrief Postponed Again (3:45 p.m.)

In a sign that Brexit talks are going to the wire and that there’s still no conclusion, EU chief negotiator Michel Barnier has again delayed his debrief to ambassadors from the bloc’s 27 remaining governments.

Initially scheduled for 2 p.m. Brussels time, it was pushed back to 5 p.m. and now to 7 p.m. The plan is for Barnier to give the final overview of whether there’s a deal or not to take into Thursday’s summit.

But there’s still too much uncertainty to give a conclusive assessment, officials said. The two negotiating teams remain locked away in the European Commission and are in contact with the most important EU capitals, particularly Dublin and London, where Boris Johnson’s cabinet has just been briefed on the latest.

Pound Whipsawed (2:05 p.m.)

The currency market hasn’t been this twitchy over Brexit since the aftermath of the referendum that set off the process in 2016. For the pound, today is all about volatility: The currency has swung between gains and losses as traders track every headline out of Brussels, London and Belfast. On Wednesday, sterling touched a five-month high as an end to the Brexit saga appeared to be in sight -- before paring those gains.

Johnson to Visit Brussels? (2 p.m)

The prime minister may travel to Brussels this evening if a deal is reached this afternoon, according to EU officials.

Irish PM to Brief Party Leaders Today (1:45 p.m.)

Irish Prime Minister Leo Varadkar will brief opposition party leaders later today on the state of the Brexit negotiations. That’s usually a sign of progress -- though he went on to tell lawmakers that a legal text had yet to be “stabilized.” In recent years, that sort of language has preceded the various accords that have been reached.

DUP Accepts Latest Proposals on Consent: RTE (1:22 p.m.)

Consent Needs to be Revisited, Irish PM Says (1:05 p.m.)

In comments unlikely to calm the DUP, Irish Prime Minister Leo Varadkar said the suspended Northern Ireland Assembly’s controversial consent mechanism should be re-examined as part of efforts to revive the body.

Under current rules, a third of assembly members can effectively block a measure they don’t like, using the so-called petition of concern, which could theoretically allow the DUP to veto any measures designed to install a border in the Irish Sea as part of a Brexit deal.

Sammy Wilson, the DUP’s Brexit spokesman today fired a warning over the issue, saying U.K. & EU negotiators “have no business interfering in the processes for consent as currently set out.”

Speaking to lawmakers in Dublin, Varadkar said the device had been “used in a way that I don’t think was ever anticipated,” though any reform needs the assent of the region’s biggest parties.

DUP’s Wilson Warns Over Consent (12:15 p.m.)

DUP Brexit Spokesman Sammy Wilson says the Good Friday Agreement “requires cross community consent for all controversial issues” passing through Northern Ireland’s power-sharing Assembly.

U.K. Wants N Ireland in Customs Territory (12 p.m.)

Brexit Secretary Steve Barclay reiterated Johnson’s commitment to keeping Northern Ireland in the U.K. customs territory, but refused to be drawn on whether discussions in Brussels include customs checks between the province and the rest of the U.K.

“It is essential that Northern Ireland is part of United Kingdom customs territory,” he said in a question and answer session with a panel of MPs. “Once we start to get into the details, that is an issue that is part of the negotiations.” He said “sensitivities” over negotiations with the EU meant he couldn’t talk further about the government’s plans.

Barclay dodged a series of questions from the DUP’s Sammy Wilson, in which he was asked if the government would ensure “cross-community” consent for any agreement on the Irish border. That would effectively give a veto for the DUP, which Wilson told him would be in line with the agreement that ended violence in the province.

“We have a clear commitment to find solutions compatible with the Belfast Good Friday Agreement,” Barclay said.

Second Summit Is Now Being Talked About (11:43 a.m.)

One EU diplomat said that the deal seems to be falling apart, and that an extra summit close to the weekend is probably going to be needed. It’s not a scenario the U.K. side are willing to contemplate right now.

Nevertheless, in Brussels it’s becoming a definite possibility because EU sees Johnson as legally bound to seek an extension. If he does, then an emergency summit become unavoidable from their point of view.

One possibility is Oct. 28, a Monday, three days before the U.K. is scheduled to leave.

Was EU Sounding Too Optimistic Last Night? (11:35 a.m.)

A U.K. official said the tone coming out of the EU on the state of talks was too optimistic last night. By tonight, there will be a clearer picture of whether both sides have got a deal.

There are bigger stumbling blocks than just the sales tax, specifically the future customs relationship between Northern Ireland and the Republic of Ireland (and thus the EU), and how to handle Johnson’s plans to give the Northern Ireland Assembly a veto of over future regulatory alignment with the EU.

Barclay on Extension Letter (11:20 a.m.)

Brexit Secretary Stephen Barclay, who is still answering questions from MPs in Parliament, says he’s “not aware” of any plan for the U.K. to send a second letter to the EU in the event of no deal being reached.

That’s after suggestions Johnson could send one letter to the EU on Saturday requesting an extension to comply with the Benn Act, followed by another to cancel the first.

On Oct. 4 Johnson’s lawyers promised a Scottish Court that he will obey the law and request an extension from the EU, while also arguing that there’s nothing to stop the prime minister continuing to say he intends to leave on Oct. 31

Emergency Summit Looming? (11:15 a.m.)

It’s now too late for the Brexit deal to be formally approved by leaders at their summit in Brussels on Thursday and Friday, an EU diplomat said. Leaders will want to wait for the House of Commons to vote on Saturday for any deal before they give a final yes, the diplomat said, speaking on condition of anonymity because of the sensitivity of the discussions. That could mean an emergency summit before the end of the month.

Level Playing Field: a Key Sticking Point (11.10 a.m.)

One of the main sticking points, according to two officials with the deliberations is the so-called level-playing field -- the commitment of the British government that it won’t undercut the EU in areas such as taxation, state subsidies and environmental standards.

This is a thorny issue that falls mostly in Political Declaration on the future relations between the two sides, rather than the exit agreement itself. However, reaching a deal on one without the other is impossible, as the two documents are seen as a package.

Barnier Optimistic, But Three Roadblocks Key (10:56 a.m.)

Barnier told EU Commissioners that he is optimistic a deal can be sealed today, RTE’s Europe editor Tony Connelly tweeted. But he says three problems remain:

VAT: Sales tax has emerged as a last-minute roadblockConsent: The DUP is pushing for a tighter Stormont lockThe level-playing field provision

DUP return to Downing Street (10:54 a.m.)

Barclay Rejects ‘Technical Extension’ Delay (10:40 a.m.)

Brexit Secretary Stephen Barclay was asked by MPs in Parliament if he would be happy for the U.K. to have a short, “technical” delay to the Oct. 31 exit day deadline to pass the legislation required for the country to leave the EU. “No,” Barclay replied. “It is important that we leave on the 31st October:”

Second EU Summit Possible, Varadkar Says (10:35 a.m.)

Another EU summit before the end of October is a “possibility” if it is needed to nail down a Brexit deal, Irish Prime Minister Leo Varadkar said. He said there is still time to get an agreement.

Varadkar spoke to Johnson this morning and has been “in contact” with the European Commission, he said. While talks are making progress, some issues remain unresolved on the questions of how customs checks on goods crossing the EU-U.K. border will work, and the kind of say over the new arrangements that Northern Ireland’s politicians will be given.

The Irish leader hopes a deal could be reached today, but “there is still more time” if not.

U.K. Will Seek Extension if No Deal Struck (10:15 a.m.)

U.K. Brexit Secretary Stephen Barclay told a parliamentary committee that Johnson will write a letter to the EU on Saturday if no deal has been agreed by then, in line with a new law. So far, Johnson has refused to say whether he would send the letter, determined to secure a deal.

“I confirm the government will abide by what is set out in that letter,” Barclay told MPs.

EU: Brexit Deal Impossible Unless U.K. Moves (10:01 a.m.)

Brexit negotiations in Brussels have reached an impasse, with two EU officials saying that a deal is going to be impossible unless the U.K. government changes its position in the negotiations.

The remaining issues cannot be resolved in the negotiating room unless Johnson’s government gives a new order to his team in Brussels to shift their red lines, one of the diplomats said.

The EU believes Johnson is trying but struggling to get the DUP -- his Northern Irish allies -- to support the draft deal which has been under discussion in the talks in Brussels, the person said.

DUP’s Wilson Warns Money Won’t Help (9:35 a.m.)

Sammy Wilson, an MP for the Democratic Unionist Party, denied reports that DUP leader Arlene Foster discussed a cash payment for Northern Ireland with Johnson yesterday to help secure her support for the Brexit deal.

“This is an issue of whether or not the union is weakened. If the union is weakened no amount of money will get us to accept the deal,” Wilson said in an interview.

The party has previously said it would support a deal that didn’t put a border in the Irish Sea, treated Northern Ireland the same as rest of the U.K. in terms of customs arrangements, gave a veto to the Northern Irish assembly and avoided checks at the border.

Conservatives Will Take Lead from DUP: Davis (9 a.m.)

Former Brexit Secretary David Davis, a committed Brexit-backer, said that securing the support of the Democratic Unionist Party will be key to getting Conservative MPs to vote for any deal Johnson secures from Brussels.

“Quite a lot of Tory MPs will take their line from the DUP,” Davis told BBC radio Wednesday. That’s despite the suggestion on Twitter of Tory MP Steve Baker late Tuesday that his group of pro-Brexit Tory MPs are “optimistic” they’ll be able to vote for a deal following a meeting with Johnson’s team.

DUP Is Resisting a Deal, U.K. Official Says (8:30 a.m.)

The Democratic Unionist Party is resisting the proposed divorce agreement and the U.K. side now thinks the chances of getting an agreement are low, according to a British official who spoke on condition of anonymity.

If Johnson can get a legal text approved in Brussels, he will then need to persuade Britain’s Parliament to vote for it, and for that he wants the DUP on side.

But the DUP is a “unionist” party, which means its members prize maintaining the economic and political unity of Northern Ireland with the rest of the U.K. above all else. And there are suggestions the deal Johnson is putting together will effectively split Northern Ireland from mainland Britain, with a new customs “border” for checking goods traveling between the two. That would be difficult for the DUP to swallow.

Both the U.K. and the EU want to avoid the need for customs checks on goods crossing the border between Northern Ireland and the Irish Republic. In the past the DUP and the U.K. government have refused to contemplate a solution that involves a customs border between Northern Ireland and the British mainland.

Lib Dems Demand Referendum on Any Deal (Earlier)

Leader of the Liberal Democrats Jo Swinson said her party is pushing for a second referendum whatever deal Johnson brings back from Brussels. “We will back a referendum -- whether it’s on Boris Johnson’s deal, whether it’s on Theresa May’s deal -- because we think it’s the public that should be in charge,” Swinson told BBC radio on Wednesday.

Her party has put down an amendment to government legislation for Tuesday calling for a referendum, although other attempts to force a second vote could come as soon as Saturday.

Earlier:

Brexit Talks Make Progress But Leave Johnson’s Key Allies UneasyCan Johnson Get a Deal Through Parliament? Silence Is Golden

--With assistance from Kitty Donaldson, Jessica Shankleman, Thomas Penny, Tim Ross, Peter Flanagan, Maria Tadeo, Dara Doyle, Patrick Donahue, Helene Fouquet, Robert Hutton and Viktoria Dendrinou.

To contact the reporters on this story: Ian Wishart in Brussels at iwishart@bloomberg.net;Nikos Chrysoloras in Brussels at nchrysoloras@bloomberg.net;Alexander Weber in Brussels at aweber45@bloomberg.net

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Ben Sills

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