Brexit Bulletin: May’s Stay of Execution – Bloomberg

Brexit Bulletin: May’s Stay of Execution – Bloomberg

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Theresa May signaled for the first time since last week’s disastrous election that she’s willing to rethink her approach to Brexit.

As she prepared to secure the votes she needs from Northern Ireland’s Democratic Unionists to prop up her minority government, the prime minister told fellow Conservative lawmakers that she takes full responsibility for the flop at the ballot box and will stay in charge only as long as they want.

“I’m the person who got us into this mess and I’m the one who will get us out of it,” May said, according to two lawmakers who attended the meeting.

May spoke to Tory lawmakers in a committee room inside the Palace of Westminster.

Photographer: Chris Ratcliffe/Bloomberg

Days away from the scheduled start of divorce talks with the European Union, she said she will seek a national consensus on the breakup in a bid to heal divisions over the best approach to quitting the U.K.

She may not have much time. EU chief negotiator Michel Barnier warned the U.K. risks crashing out of the bloc if it “wastes” any more of the two years available for the talks.

May’s plans for the negotiations were thrown into further difficulty when George Bridges quit as a minister in the Brexit department and colleague David Jones also left the government. May appointed Joyce Anelay, a member of the House of Lords, to Secretary David Davis’s department.

Just how the prime minister might change her stance on Brexit remains unclear. The odds are that she will soften it by giving greater priority to the needs of the economy, perhaps by rethinking her decision to leave the bloc’s single market and customs union. The EU would still charge a price for access, one which Tory euroskeptics might balk at.

Former Foreign Secretary William Hague wrote in the Daily Telegraph on Tuesday that May should reach out to the leaders of the other political parties and business executives to find common ground.

In an indication of which side has the momentum, The Sun estimated 342 members of the new House of Commons will likely to support a softer Brexit, while 297 will favor a harder one.

Tom Newton Dunn/Twitter

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Tuesday’s Diary

May has a busy day on Tuesday as she seeks to strike a deal with the Democratic Unionist Party to win the support of its 10 members of Parliament. Much could ultimately depend on whether May can moderate Brexit enough to avoid a hard border dividing the two Irelands. Bloomberg’s Dara Doyle takes a look at the border issue.

May then jets to Paris to meet President Emmanuel Macron. The two will consider a joint crackdown on technology companies that fail to remove terrorism-related content, and will then watch France and England play football at the Stade de France in Paris.

Macron, unlike May, is on course to secure a strong parliamentary majority after elections at the weekend. He is now a key player in Europe, but one who has vowed to be tough on Britain during the Brexit talks.

Continental Drift

Elsewhere on the continent, officials are likely twiddling their thumbs waiting for the British to again get their act together.

In the year since the referendum the U.K waited nine months before officially activating the two-year withdrawal process only for May to then call the snap election.

In an interview with European newspapers including the Financial Times, Barnier told the U.K. to start talks “very quickly” and to appoint a negotiating team that is “stable, accountable and with a mandate.”

“I can’t negotiate with myself,” he added.

EU negotiator Michel Barnier doesn’t yet know who he will be facing in Brexit talks.

Photographer: Jasper Juinen/Bloomberg

U.K. and European Commission officials did meet on Monday in an effort to find an agreement on how to structure the talks.

Clearing Up

Firms that clear euro-denominated derivatives may be forced to relocate to the EU from London after Brexit under Commission proposals to be rolled out on Tuesday.

Under plans for overhauling supervision of clearinghouses based outside the bloc, firms could be forced to move their euro clearing operations to a location inside the EU. This so-called location requirement spurred warnings from the industry of skyrocketing costs.

Requiring a move to an EU-based entity would boost initial margins by as much as 20 percent, the International Swaps and Derivatives Association estimates. That’s still less than the 92 percent cited by London Stock Exchange Group Chief Executive Officer Xavier Rolet.

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On the Markets

The pound fell against all its Group-of-10 peers on Monday as traders decided the risks of an unstable coalition government outweighed the increased chance of a soft Brexit. Strategists said sterling may slide even further although ING said an “economically rational” Brexit could prove a game-changer for the currency.

Moody’s said on Monday that the U.K. election result increases fiscal risks and will hamper Brexit talks, making it credit-negative for the nation.

And Finally…

The need for May to negotiate a deal with the Democratic Unionists means a possible postponement of the Queen’s Speech, in which her government’s program is outlined.

The fallout goes from the sublime to the ridiculous. Moving it until after June 19 would risk it clashing with Her Majesty’s annual trip to Royal Ascot, one of the most prestigious horse-racing events.

There may be a solution: BBC horse-racing correspondent Cornelius Lysaght tweeted that in 2001 the Queen opened Parliament in the morning and made it to the track for the afternoon’s racing.

Still, another obstacle is that the speech needs to be written in ink on goatskin, which takes a few days to dry.

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