With just six months left before Britain is due to leave the EU in the country’s biggest shift in foreign and trade policy in more than 40 years, and with the Brexit drama ongoing without a clear resolution, moments ago Bloomberg reported that U.K. Prime Minister Theresa May is preparing to make a significant new Brexit offer to the European Union in an attempt to open the door to a deal.
Brexit negotiations have stalled on the question of how to avoid the need for police and customs checks on the border between the U.K. and Ireland, but the British side now sees a path to reaching an agreement, a senior British official told Bloomberg.
The U.K.’s offer applies to the so-called Irish backstop, a legal guarantee to ensure that the border between Northern Ireland and the Irish Republic remains open and free for travel and trade after Brexit. It would only apply as a last resort in case an overarching trade deal doesn’t address the issue.
Under the plan, which is expected to be proposed later this month, the U.K. would back down on its opposition to new checks on goods moving between the British mainland and Northern Ireland. In exchange, May’s team would need the EU to compromise and allow the whole of the U.K. including Northern Ireland to stay in the bloc’s customs regime.
Although the picture is detailed and complex, the outline of a deal — as the British see it — would potentially unlock negotiations which have been in virtual stalemate since March.
The EU says without agreement on the backstop, there can’t be an exit deal. That would mean Britain crashing out of the bloc in March, and no transition period before future trading arrangements take effect.
As previously explained, the Irish border problem arises because after Brexit, the U.K. will no longer be part of the EU’s customs union and single market. The EU says this will mean goods moving into Ireland will need to be checked to ensure they comply with safety and quality standards rules and that the correct tariffs are paid.
Both sides want to avoid imposing security and customs checks at the frontier between Ireland and the British province – which would revive memories of the sectarian conflict that gripped the region for decades until a peace deal was reached 20 years ago. In order to avoid these checks taking place at the Irish border with Northern Ireland, the EU has proposed keeping the region inside its customs territory.
That would require checks to take place instead at a notional border down the Irish Sea – between Northern Ireland and the British mainland. May has flatly rejected this option – warning it would divide the U.K. constitutionally into two separate customs territories, something she said no prime minister could ever contemplate.
So what is the solution?
The proposed compromise revolves around the distinction between customs checks and regulatory checks. May wants to keep the whole U.K. – including Northern Ireland – inside the EU tariff regime as part of the backstop plan. The EU is currently opposed to allowing this, and wants only Northern Ireland to remain inside its customs territory after Brexit. That will need to change if there is to be a deal.
Under the British plan — which has not yet been announced and could change — the U.K. would keep goods regulations in Northern Ireland closely aligned with the EU rules applying in the Irish Republic. But new regulatory checks would be implemented on goods passing between Northern Ireland and the British mainland, where different rules could apply once the country is outside the EU.
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Following the news, the pound jumped, rising as high as 1.3116 against the dollar before paring some gains. As Bloomberg’s Richard Jones notes, “we’ve been here before.” He adds that obviously the devil is in the details, “so the reaction will probably remain muted. Any compromise still has to get through Parliament (not to mention Conservative party conference) and the EU will need to approve it as well. Pitfalls remain and a deal is still not nailed on.” Still, at the margin this does move the situation away from a no-deal Brexit.
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