EU says disorderly exit looms as May seeks way out of Brexit maelstrom

Reuters , Tuesday 2 Apr 2019

The European Union said on Tuesday that Britain could be heading for a potentially disorderly exit in just 10 days time as Prime Minister Theresa May met with ministers to thrash out ways to break the Brexit deadlock.

Nearly three years since the United Kingdom voted to leave the EU in a shock referendum result, May's exit strategy is up in the air as her government and party are still squabbling over how, when or even if Brexit should happen.

May's divorce deal has been defeated three times by the lower house of the British parliament, which failed on Monday to find a majority of its own for any alternatives. She is expected to try to put her deal to a fourth vote this week.

The deadlock has already delayed Brexit for at least two weeks beyond the planned departure date to 2200 GMT on April 12.

"Over the last days a no-deal scenario has become more likely, but we can still hope to avoid it," EU chief Brexit negotiator Michel Barnier said in Brussels.

May chaired several hours of cabinet meetings in Downing Street in a bid to find a way out of the crisis. It was unclear what, if anything, had been agreed.

Barnier said May's deal was the only way to ensure an orderly EU exit for the world's fifth-largest economy. If the deal was rejected, London must choose between a no-deal Brexit and a long delay, he said.

European Central Bank policymaker Francois Villeroy de Galhau said markets needed to price in the growing risk of a no-deal.

The cacophony of warnings over a disorderly Brexit ratchet up the pressure on British lawmakers as some try to grab control of parliament to prevent a no-deal.

If May cannot get her deal ratified by parliament then she has a choice between leaving without a deal, trying to trigger an election, or asking the EU for a long delay to negotiate a Brexit agreement with a much closer relationship with the bloc.

At least half of her Conservative Party wants to leave the EU without a deal, though some lawmakers and ministers are telling her she must keep the United Kingdom firmly within the bloc's economic orbit.

May will set out next steps ahead of an emergency EU summit on April 10, her spokesman said. May remained opposed to another referendum, he added.

"I hope that we can still find a solution. The British parliament has said itself that it doesn't want a disorderly Brexit," German Chancellor Angela Merkel said.

The defeat of May's deal after pledging to quit if it was passed has left the weakest British leader in a generation facing a spiralling crisis.

The British electorate, its two major parties and May's cabinet are all divided over Brexit. May risks ripping her party apart whichever way she tilts.


Investors and diplomats are in despair at the chaos and such is the volatility of Brexit news from London that some traders have stepped away from sterling - which has seesawed on Brexit news since the 2016 referendum.

Sterling fell towards $1.30. The EU said a no-deal would disrupt financial markets and have an impact on liquidity.

"Markets were betting as recently as yesterday that there would be a deal and they are going to need to price in the growing risk of a no deal, including on the value of the pound," the ECB's Villeroy told French radio station BFM Business.

Britain's top civil servant, Mark Sedwill, said a no-deal Brexit would push up food prices by 10 percent, force direct British rule in Northern Ireland and compromise national security, the Daily Mail reported.

Auto-maker Ford also sounded the alarm bells, saying it would have to consider what actions to take to protect its buisness in the event of a no-deal Brexit.

"We've been clear with the government in the UK and also in Brussels, we have to maintain frictionless trade at the borders and tariff-free trade," Ford Europe Chairman Steven Armstrong said. No-deal means there would be no transition so the exit would be abrupt. Britain is a member of the WTO so tariffs and other terms governing its trade with the EU would be set under WTO rules. A group of lawmakers said on Tuesday they would try to pass a law which would force May to seek a delay Brexit and thus prevent a no-deal exit on April 12.

"We are now in a really dangerous situation with a serious and growing risk of no-deal in 10 days’ time," said opposition Labour lawmaker Yvette Cooper, who has proposed the legislation alongside eleven others from several political parties.

With Brexit stalled, parliament has been trying to come up with an alternative but has thus far failed. That means May's deal is back in focus, though she must find a way to get around a ban on repeatedly bringing the same matter to a vote in parliament.

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