EU Says No-Deal Risk ‘Palpable’ as Court Resumes: Brexit Update

(Bloomberg) — Boris Johnson’s government is back in the Supreme Court for the second day of hearings into his decision to suspend Parliament. Judges are waiting for a written statement on what he’ll do if he loses the case, which has the potential to derail his Brexit strategy and even curtail his premiership.

Reporting to the European Parliament on his discussions with Johnson on Monday, European Commission President Jean-Claude Juncker said the risk of a no-deal Brexit on Oct. 31 is now “palpable.” The pound fell.

Key Developments:

Day 2 of court hearings has begun; Click here for live stream The third and final day of hearings is Thursday, but the Supreme Court hasn’t given a date for a rulingPound drops as much as 0.5% after Juncker commentsThe Financial Times reported the government is preparing to overhaul its trade tariff schedule for a no-deal Brexit

‘Treasury Devil’ to Open Day 2 for Government (10:15 a.m.)

James Eadie, the government’s go-to lawyer in major pieces of litigation — a role known as the “Treasury Devil” — is due to kick off the second day of hearings at the Supreme Court. Aidan O’Neill then presents on behalf of 80 Scottish lawmakers, who secured the ruling in Edinburgh that the government’s suspension of Parliament was unlawful.

The government’s main contention is the issue has no place being decided by judges, and that Johnson has acted within his powers. The decision to prorogue Parliament was one of “high policy and politics, and not law,” they argue.

“The appeals would also involve the courts identifying and enforcing a new constitutional convention as to the length of prorogation, which the courts have no jurisdiction to do,” lawyers led by Eadie said in their written arguments.

Both the Scottish and English challengers — who lost their separate case in the High Court in London — argue the issue falls squarely in the jurisdiction of the court to deal with and that Johnson abused his executive powers.

“It is not, and cannot be, right that the executive can exercise its powers so as to remove itself from accountability to Parliament in relation to decisions of high constitutional — and potentially irreversible legal, economic and social — impact,” lawyers for Joanna Cherry in the Scottish case said. 

Sturgeon Doubts Johnson’s Brexit Ideas (9:30 a.m.)

Scotland’s First Minister Nicola Sturgeon cast doubt on Boris Johnson’s proposal to replace the so-called Irish backstop, and said the prospects of a Brexit deal “have to be slim.”

“We will have to see what unfolds over the next few weeks, but it’s a very limited form of Northern Ireland-only backstop he appears to be talking about,” Sturgeon told reporters in Berlin, where she is due to meet German officials. “It’s very difficult to see how Boris Johnson can secure a deal that satisfies the European Union and commands a majority” in Parliament.

On the Supreme Court hearings in London, Sturgeon said that a ruling for the government would effectively mean a “government can suspend Parliament at any time it wants.” Conversely, a loss for Johnson would mean he “will have been found to have acted unlawfully” and would have to consider his position.

Speaking at the German Council on Foreign Relations on the fifth anniversary of the Scottish independence referendum, Sturgeon predicted that “over the next few years,” Scotland will become an independent member of the EU. “We are living in extraordinary and unprecedented times in the U.K,” she said.

Juncker: Sticking Point Is Still the Backstop (8:40 a.m.)

In his briefing to the European Parliament in Strasbourg, France, on Monday’s talks with Boris Johnson, European Commission President Jean-Claude Juncker said the main sticking point remains — as it has for months — the so-called backstop provision for the Irish border. He demanded the U.K. provide its proposals for an alternative solution in written form as soon as possible.

Juncker said that while the discussions with Johnson in Luxembourg were “friendly, constructive and, in part, positive,” the risk of the U.K. leaving the bloc without an agreement at the end of October is “palpable.” The pound fell 0.3% after Juncker’s comments.

A British official said on Tuesday the government is sounding out the bloc on its ideas for the Irish border before submitting its plans in written form.

Carney Could Be Asked to Extend Term on Brexit: FT (Earlier)

Bank of England Governor Mark Carney could be asked to extend his term past Jan. 31 if Brexit is delayed again, the Financial Times reported, citing people familiar with the matter it didn’t identify.

The newspaper cited a government official as saying the process of choosing Carney’s successor is going “very slowly,” while an expected election in the fall makes it likely that a decision would not be made until a new government was in place.

Responding to the report, the Treasury said “the process is on track and we will make an appointment in due course.”

Earlier:

Johnson Struggles in Supreme Court on Day One of Suspension CaseRecord Numbers Seek Debt Help With U.K. on Brink of BrexitEurope Hunts For Boris Johnson’s Plan: Brexit Bulletin

–With assistance from Stuart Biggs, Thomas Penny and Alan Crawford.

To contact the reporters on this story: Jeremy Hodges in London at jhodges17@bloomberg.net;Jonathan Browning in London at jbrowning9@bloomberg.net;Ian Wishart in Brussels at iwishart@bloomberg.net

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Stuart Biggs, Thomas Penny

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