In Short: Brexit deadlines loom, but can May meet them?

11-21-2017

A crucial and precarious next step in the Brexit saga that has rattled markets approaches Dec. 14-15 with the European summit. At this meeting, Prime Minister Theresa May must convince European Union (EU) leaders that “sufficient progress” has been made in the negotiations in order to unlock the next stage of the talks: the all-important trading relationship.

In order to achieve that, however, May has to make two concessions that will go down badly with her party: offering more money to the EU and reaching a compromise on the extent to which the European Court of Justice’s (ECJ) has a say on the rights of EU nationals living in the U.K. So far, she has held back from confronting the hardcore Leavers in her party, telling them it is in the U.K.’s national interest to do a deal and that this means making some concessions.

The British government already has accepted that the U.K. will pay pensions and other future commitments. Now is the time for May to absorb the political pain from having others put a (no doubt very large) number on it. On the rights of EU nationals in the U.K., she is going to have to accept a joint decision by the U.K. Supreme Court and the ECJ. But conceding this might indeed trigger a Tory Eurosceptic revolt to replace her with someone more “committed” to leaving: Boris Johnson, David Davis or Michael Gove.

If there is not sufficient progress at the December meeting, the talks would not move on to trade until March 2018, which would increase the risk of leaving without a deal. That would be disastrous, and May knows it. It is now close to the moment when she has face the hard Brexiteers.

Observing all these uncertainties, the EU might well conclude there is no point in making significant moves now. Some Europeans may even nurture hopes that the eventual outcome of all this chaos is that Britain reconsiders separating form the EU altogether. One outside possibility is that the EU’s last-minute offer would be aimed not at crafting a Brexit deal, but meant to persuade the U.K. to reconsider the whole notion of Brexit. But such brinkmanship carries risks for the EU. Imposing a humiliating settlement on Britain might seem economically advantageous, but over the long term, the political and strategic consequences of a bitter Brexit are much harder to calculate.