Johnson Tells Merkel Deal ‘Essentially Impossible’: Brexit Update

Johnson Tells Merkel Deal ‘Essentially Impossible’: Brexit Update

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Boris Johnson told German Chancellor Angela Merkel a Brexit deal is essentially impossible if the EU demands Northern Ireland should stay in the bloc’s customs union. The call between the leaders, at 8 a.m. Tuesday, came after a text message from one of the prime minister’s officials, reported by the Spectator magazine, said his government is preparing for talks to collapse.

Ministers published updated no-deal Brexit planning documents in London as negotiations between the U.K. and EU continue in Brussels.

Key Developments

U.K. tweaks no-deal tariff schedule for trucks, fuel and clothingShapps says U.K. would not punish EU states who back a Brexit delayFormer minister Amber Rudd says she would back a second referendumJohnson Warned Against Big Tax Cuts as U.K. Faces No-Deal ShockPound slips 0.5% against the dollar

Oil Supply ‘Secure’ if No-Deal, U.K. Says (12:45 p.m.)

The supply of crude and refined fuels will be secure in the event of a no-deal Brexit, the U.K. government said.

“The U.K. can draw on both substantial domestic production and oil imports from diverse international sources, including Europe, meaning that supply is secure,” according to a no-deal planning document released on Tuesday.

If the risk to U.K. fuel supplies became material, the government would be able to activate the Downstream Oil Protocol, making a reserve fleet of 80 road tankers available to the industry, it said.

Financial Services Risks Remain in No-Deal (12:15 p.m.)

Customers of U.K. financial services companies that use passporting to trade in the European Economic Area cannot be fully protected from risks, according to the U.K.’s document on planning for a no-deal Brexit published Tuesday.

“The EU authorities and some individual Member States have taken legislative steps to prepare for leaving without a deal, which the government welcomes, but in the absence of further actions by EU authorities residual risks remain,” the document said.

Contract continuity is a key issue. About 16 trillion pounds ($19.3 trillion) of swaps contracts between U.K. and EU traders mature after October. While the contracts will remain valid, the Bank of England and industry lobby groups have warned so-called life cycle events in the contracts — such as extending the maturity of a trade — could face hurdles.

Smith Rejects Threat to Security Cooperation (12:10 p.m.)

Northern Ireland Secretary Julian Smith attacked the overnight briefing from Johnson’s office that Britain could stop cooperating on security issues if the EU doesn’t give way.

“I am clear that any threat on withdrawing security cooperation with Ireland is unacceptable,” Smith wrote in a Twitter post after Tuesday’s cabinet meeting. “This is not in the interest of Northern Ireland or the Union.”

For a minister to use Twitter to attack the policy advocated by the prime minister’s office is a sign of how far, and how fast, relations have deteriorated in Johnson’s government. Were the prime minister to attempt to fight the next election on a no-deal platform, it suggests he’d face losing the support of some of his most senior ministers.

Negotiations Resume In Brussels (12 p.m.)

Talks between U.K. officials, led by Johnson’s envoy David Frost, and the European Commission are resuming in Brussels, despite the prime minister saying a deal is essentially impossible as things stand.

Frost and his team will be continuing to discuss the U.K.’s proposals with the EU side and give clarifications, a U.K. official said.

U.K. Commits to No Infrastructure on Border (11:50 a.m.)

The U.K. Vowed not to build any infrastructure on the Irish border in the event of a no-deal split, but acknowledged U.K. exports would face tariffs and checks as they pass into Ireland.

#r4today https://t.co/vGzsEmOXhf pic.twitter.com/7B5vNTDfIH

— BBC Radio 4 Today (@BBCr4today) October 8, 2019

It said in a no-deal Brexit planning document published Tuesday morning that it would not introduce new checks on goods moving into Northern Ireland and would try to maintain the status quo “as far as possible.”

But it said the policy might not be sustainable and would seek a permanent solution in talks with the bloc.

“Significant risks remain as this policy is temporary in nature and unilateral,” the document said. “The U.K. Government will look to engage with the Irish Government and the EU as soon as possible following Brexit.”

Reserved response from Berlin After Call (11:45 a.m.)

The response from the German Chancellery was very reserved in response to reports in London about the Tuesday morning call between Angela Merkel and Boris Johnson (see 10:35 a.m.).

A government spokesman confirmed the call had taken place but declined to comment on the content of the conversation.

The Chancellor is well aware of the blame game which Downing Street has started, but does not intend to enter it, a German official said under the condition of anonymity.

Tusk Says Brexit Not ‘Stupid Blame Game’ (11:40 a.m.)

EU Council President Donald Tusk held no punches in the ever escalating war of words between Brussels and London, accusing Boris Johnson of playing a ‘stupid blame game’ in his dealings with the bloc.

“What’s at stake is not winning some stupid blame game. At stake is the future of Europe and the U.K. as well as the security and interests of our people,” Tusk wrote on Twitter. “You don’t want a deal, you don’t want an extension, you don’t want to revoke,” the Council President added, before asking “quo vadis?” the Latin for “where are you going?”

DUP’s Foster Assails ‘Crazy’ Merkel Demand (11.30 a.m.)

DUP leader Arlene Foster assailed German chancellor Angela Merkel’s reported comments that Northern Ireland must remain in the EU customs union (see 10:35 a.m.), describing the idea as a “surrender.”

“For the U.K. to be asked to leave a part of its sovereign territory in a foreign organisation of which the U.K. would no longer be a part and over which we would have no say whatsoever is beyond crazy,” Foster said in a statement.

Johnson Can’t Be Trusted, Scottish Court Told (11:15 a.m.)

Brexit is back in Scotland’s highest court as a group of petitioners argue it should write the letter to the EU requesting more time, as required by an Act of Parliament last month. The letter would then be sent in the event of Boris Johnson failing to comply with the law.

Aidan O’Neill, the lawyer representing the group, told the panel of three judges at the Court of Session in Edinburgh that Johnson just can’t be trusted, a line that’s underpinned a series of legal challenges.

“What happens if he leads some sort of conscientious objection?” O’Neill asked. “We have a prime minister who apparently thinks he can continue his practice as a journalist by making things up and telling lies.”

The judges asked why the case on appointing someone to write the extension letter had come to them. The arguments will continue through the day.

Starmer Says Johnson Wants No-Deal Split (10:45 a.m.)

Keir Starmer, Brexit spokesman for the opposition Labour Party, accused Johnson of following a “cynical” strategy to intentionally “sabotage” the talks with the EU.

“Boris Johnson will never take responsibility for his own failure to put forward a credible deal. His strategy from day one has been for a no-deal Brexit,” Starmer said in a statement. “It is now more important than ever that Parliament unites to prevent this reckless Government crashing us out of the EU at the end of the month.”

Johnson to Merkel: Deal Essentially Impossible (10:35 a.m.)

Boris Johnson held what seems to have been a very difficult phone call with German Chancellor Angela Merkel on Tuesday morning.

According to a British official, Merkel told the premier Northern Ireland must remain part of the EU’s customs union if he wants to secure a divorce agreement with the bloc. Johnson told the German chancellor that this demand, along with the EU’s unwillingness to engage with his new proposals, makes a deal essentially impossible.

With little progress made in recent days, U.K. officials now believe Brexit talks are close to collapse. The BBC, which first reported details of the conversation, said Johnson’s office regarded the call as a clarifying moment.

Brexit Deal Looks ‘Difficult,’ DUP Says (10 a.m.)

DUP Deputy Leader Nigel Dodds said it looks unlikely a deal to break the impasse over Brexit will be reached this week, as the U.K. and EU remain divided over a plan which would effectively offer his party a veto over measures to avoid a hard border in Ireland.

In an interview with Bloomberg TV, he said he doesn’t see Boris Johnson watering down the consent principle and accused Dublin of wanting to have “its cake and eat it” on the issue.

Irish Prime Minister Leo Varadkar appears to be “desperate” to avoid the blame for a no-deal Brexit, Dodds said.

Shapps Denies U.K. Planning to Punish EU States (Earlier)

Transport Secretary Grant Shapps denied the U.K. Government is drawing up plans to punish EU member states that agree to a delay to the Oct. 31 Brexit deadline. The threat was in a text message from one of Boris Johnson’s advisers published by the Spectator magazine.

The note, attributed to a “contact in Number 10”, said that any EU member state that agrees to delay Brexit would go to the back of the line for cooperation on defense and security.

“I don’t think that’s the case at all,” Shapps told BBC Radio. He said it isn’t clear who wrote the text and insisted the government is in serious talks with the EU to get a deal.

Rudd Accepts Case For Second Referendum (Earlier)

Amber Rudd, who quit Boris Johnson’s cabinet last month in protest at his Brexit policy, said she now accepts the case for a confirmatory vote on any deal agreed with the EU.

“We need to look much more carefully about how to find a compromise,” she told BBC Radio, accusing Johnson of giving up on reaching agreement with the bloc.

“I still believe that we could find a deal that gets through the House of Commons,” she said. “But we need to make sure that the Number 10 machine works with MPs, stops expelling MPs — perhaps from its own party, works cross-party with Labour, and yes, may indeed have to have a confirmatory referendum on a deal at some stage to get it through.”

U.K. Tweaks No-Deal Brexit Tariffs (Earlier)

The U.K. revamped the tariffs it will levy after a no-deal Brexit following warnings from industry that its earlier plans risked making domestic producers uncompetitive.

Import duties for heavy goods vehicles will be reduced to 10%, in a boost to the road haulage industry, while levies for bio-ethanol will be raised and new tariffs for clothing introduced, the Department for International Trade said on Tuesday.

Earlier:

Boris Johnson Preparing for Brexit Talks to Collapse: SpectatorU.K. Tweaks No-Deal Brexit Tariffs for Trucks, Fuel and ClothingJohnson Warned Against Big Tax Cuts as U.K. Faces No-Deal Shock

–With assistance from Anna Edwards, Peter Flanagan, Nikos Chrysoloras, Emma Ross-Thomas, Rodney Jefferson, Dara Doyle, Arne Delfs, Ian Wishart and Tim Ross.

To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net;Jessica Shankleman in London at jshankleman@bloomberg.net;Helen Robertson in London at hrobertson18@bloomberg.net

To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Thomas Penny

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