Gove Expected To Resign After May's Desperate Pitch To Save Brexit Deal

Update XIX: Activity in the UK should be winding down soon with the end of an incredibly hectic day that began with the resignation of Brexit Secretary Dominic Raab and was filled with conflicting reports about a no confidence vote, other potential resignations (some that materialized, others that didn't) and, crucially, whether or not Environment Secretary Michael Gove will accept an offer to replace Raab.

As it happens, immediately after May's speech, reports that Gove is planning to resign have resurfaced. Given the timing of the report and the fact that Gove met with May earlier in the day, it's being taken seriously by markets: The pound slid back to its LoD on the news (down 2%).

  • GOVE EXPECTED TO RESIGN TONIGHT - TIMES REPORTERS

Apparently, May's pleas for unity "in the national interest" have fallen on deaf ears.

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Update XVIII: As May takes questions from reporters, here are the highlights so far:

  • May hasn't resigned. She believes "with every fiber of my being" that her deal is the best deal possible.
  • With her voice sounding a bit strained, May insisted that her Brexit deal delivers on what the British people voted for - it takes the UK out of the single market, out of the jurisdiction of the European Court of Justice, out of the Common Fisheries Program, and eventually out of the customs union.
  • May says she "understands fully" why some people are not happy with the Cabinet's decision to reluctantly back the deal. But she insisted that the deal delivers on the promise of Brexit, and that it will be impossible to make everybody happy.
  • She said she's "sorry" that some of her cabinet minister have quit but that she has produced the best deal possible, and furthermore a deal that is in the "national interest" (May has repeated this phrase at seemingly every opportunity). She added that the British people expect the government to "get on with it" - hinting that constituents might punish ministers who resist the deal.
  • If her deal is rejected, nobody can predict what will happen next.
  • MPs have been debating on how best to deliver on the result of the referendum ever since it took place. But the British people want us to focus on a way to leave the EU in a way that's best for the UK.
  • And if she faces a leadership challenge? Leadership requires making hard choices, and regardless of what happens, May intends to "see this through."
  • Talking next steps: May will take the deal to the EU to finish negotiating some of the finer details before a final deal can be agreed on at the Nov. 25 meeting of EU ambassadors. Then, the final deal will be put to a vote in the Commons.
  • "There will not be a second referendum."
  • "I don't regret calling the vote in Parliament last year" (a disastrous vote that saw her conservative party lose its overall majority).
  • The press conference ended with a convoluted cricket analogy, initially posed by a reporter, which May fleshed out in more detail: In it, May compared herself with her cricket hero, Geoffrey Boycott. "Geoffrey Boycott stuck to it and he got the runs in the end."

The upshot? May is sticking with her deal; the press conference was one more desperate attempt to pitch it.

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Update XVII: Theresa May is holding a press conference to reveal where her government stands regarding the Brexit draft agreement after a day of chaos where seven members of her government resigned, including two senior members of May's cabinet, and five junior ministers.

As May leaves the nation waiting, there have been conflicting reports that the presser has been cancelled because of a no confidence vote. Though there's one thing of which we can be reasonably certain: The podium at which May will speak bears the prime ministerial emblem, which suggests she won't be resigning.

The confusion surrounding whether a no confidence vote has been triggered has sent the "untradeable" pound to fresh session lows, down 2% on the day to $1.2732.

Pound

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Update XVI: With May's noon press conference fast approaching, here's a recap of all the Tories who have either resigned cabinet posts or threatened to resign since yesterday, courtesy of RT.

Jacob Rees-Mogg
Mark Francois
John Whittingdale
Steve Baker
Henry Smith
Simon Clarke
Anne Marie Morris
Lee Rowley
Sheryll Murray
Laurence Robertson
Martin Vickers

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Update XV: As more of her cabinet threatens to walk, Theresa May is planning to hold a press conference at 5 pm local time (12 pm ET).

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Update XIV: This is a major blow to May's draft deal.

Environment Secretary Michael Gove will reportedly only accept May's offer to become Brexit Secretary if the EU cancels its Nov. 25 summit, and if he is allowed to renegotiate the deal. And he's still apparently weighing whether to quit the Cabinet.

Reports also suggest that Mordaunt and Chris Grayling are also rumored to resign by end of day. They would be the eighth and ninth resignations since yesterday.

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Update XIII: Another junior cabinet minister has resigned. Rehman Chishti, the Vice Chair of the Conservative Party for Communities, has reportedly left the cabinet, making him the seventh defection since yesterday's cabinet meeting (which now seems like it happened ages ago).

Meanwhile, Frustration in Parliament is boiling over...

...As more ministers announce they've had it.

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Update XII: European markets are in turmoil as the contagion from the Brexit chaos spreads.

  • The Stoxx Europe 600 Index falls 1%, hitting its lowest intraday level since Oct. 31, dragged by a sell-off in U.K. stocks.
  • RBS shares have tumbled almost 10% n concerns that the conservative government could collapse and Jeremy Corbyn could become prime minister.

GBP

  • The pound is down more than 1% to trade at $1.2771.
  • And more Wall Street analysts are calling for more declines ahead: ING says the pound could fall another 3% to 4% due to Raab's resignation, which has increased the likelihood of a "no deal" outcome, according to strategists Chris Turner and Petr Krpata.
  • Indexes tracking UK electricity companies, transport operators and general retailers were all down more than 4%, while indexes tracking banking, telecoms and life insurance were off 2%. 
  • However, the FTSE 100, which receives three-quarters of its revenue from outside the UK, was little-changed.

Amid the chaos, more conflicting reports about Gove's decision to turn down Brexit secretary post are hitting the tape.

Validating earlier reports about a brewing leadership challenge, several Tory MPs who had once thought May would easily survive a 'no confidence' vote have changed their minds. "Nothing is guaranteed," they've said. And as fears about a possible Corbyn-led Labour government intensify, it's worth considering that he remains one of the most popular politicians in the UK, but still lags Theresa May by about 2 percentage points.

Popular

(Chart courtesy of Statista)

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Update XI: If Brexiteers do gather enough letters to force a no confidence vote, Tuesday will be the day to watch, according to media reports.

Meanwhile, remainer Tory Norman Smith said that if May's deal is voted down, he and other remainers will push for a "People's Vote" - effectively a second Brexit referendum.

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Update X: In what would be a crucial victory for May (assuming the report is accurate), Andrea Leadsom, the Leader of the House of Commons, will not be resigning.

Clarifying earlier reports, Leadsom said she's not going to be quitting "for now", though she does want the deal to be changed.

Morduant and Fox, two other senior ministers whose support is viewed as crucial for passing a deal, are also reluctantly planning to remain.

Unsurprisingly given the unceasing chaos that has surrounded this latest phase of the Brexit saga, equity strategists at Citigroup see lower odds of a deal eventually getting done.

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Update IX: Just like Wednesday, contradictory reports have abounded on Thursday.

After a 'no confidence' vote was looking all but certain, the BBC is now reporting that the 48-letter threshold has not yet been reached.

And Michael Gove, who was earlier said to have begrudgingly accepted the role of Brexit Secretary, has reportedly turned it down.

Henry Smith has tweeted his letter of 'no confidence':

Mogg's letter has also been published online:

And ERG leader Mogg insists that the number of no confidence letters 'is growing'.

  • REES-MOGG SAYS NUMBER OF VOTE OF CONFIDENCE LETTERS IS GROWING

And on the floor of the Commons, Theresa May has finally stopped taking questions from MPs after 2 hour and 58 minutes, according to the Financial Times.

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Update VIII: Mogg's "no confidence" letter is in...

...We now await further reports about a 'no confidence' vote that seems 'almost inevitable', though some reports suggest the ERG group of hardline Brexiteers is split on whether to call for a leadership challenge.

Reflecting on reports that Gove has accepted the Brexit Secretary role, BBG has published a brief summary of what Gove as BS would mean for the deal. Then again, some are reporting that the Department for Exiting the European Union might be disbanded entirely.

He’s a Brexiteer but also more pragmatic than a lot of his fellow campaigners. He’s spoken out in the past in favor of the idea of clinching Brexit - any Brexit - and then tweaking it later to improve it. Gove would need to weigh up whether he wants the job, though. Two Brexiteers quit after realizing the job didn’t wield much power, as the deal was cooked by May’s team. The EU is unlikely to budge, so there’s no chance to wade back in and secure a heroic renegotiation from Brussels. Does he want to be the minister for no deal Dan, I will add the Soros commentary and then get coffee.

According to the Westminster rumor mill, Rory Stewart could replace Gove as environment secretary if Gove accepts the Brexit Secretary job.

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Update VII: Just as May is fighting for her political future, more unsympathetic EU bureaucrats are turning up the pressure.  The latest was EU Council Head Donald Tusk, who said that "Since the very beginning, we have had no doubt that Brexit is a lose-lose situation and that our negotiations have only been about damage control."

This statement makes the EU's ulterior motive clear: To frustrate Parliament and hopefully stop the Brexit. Tusk also confirmed that the Nov. 25 EU Brexit summit is on...with or without a deal in the UK.

Another junior cabinet minister just tendered his resignation: North East Hampshire MP Ranil Jayawardena, a parliamentary private secretary to the Ministry of Justice, has also offered his resignation. As Jawawardena leaves, Gove has reportedly accepted the Brexit Secretary role.

Cutting against earlier reports that Mordaunt would begrudgingly remain in May's cabinet, the minister is reportedly meeting with May Thursday afternoon to push for a "free vote" on the Brexit plan - which No. 10 is adamantly against (most likely because they would lose). This is the clearest indication yet that Mordaunt could become the third senior minister to resign.

Meanwhile, rumors are circulating that the ERG has reached the 48-letter threshold to call for a leadership challenge, though there's been nothing concrete yet. Back in Westminster, Theresa May has been answering questions from agitated MPs for more than two hours - most of them hostile, as BBG pointed out. And the Sun is reporting that the confidence vote in May is "already on."

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Update VI: The Telegraph is reporting that Gove has been offered the position of Brexit secretary, but he's unsure whether to accept following Raab's resignation, as he also has reservations about the deal.

Meanwhile, rumors are circulating that Penny Mordaunt may become the third senior minister to resign on Thursday.

Watch video of Raab's interview with the BBC:

And video of Scotland's Mundell calling him a "carpetbagger".

Here's a quick roundup of Thursday's most notable developments, courtesy of RanSquawk.

  • UK Brexit Secretary Raab has resigned
  • Secretary of State for Work and Pensions Esther McVey
  • Parliamentary Under-Secretary of State for Exiting the European Union Suella Braverman
  • Parliamentary Private Secretary in the Department of Education Anne-Marie Trevelyan
  • James Rothwell Telegraph Brexit correspondent tweeted that “a plugged-in Tory source, not a Brexiteer, reckons 6 Cabinet
  • resignations to follow Raab, three unknowns, the rest will back the deal. (Newswires)
  • Those who will not resign:
  • Steven Swinford of the Telegraph tweets "Jeremy Hunt and Sajid Javid are going nowhere, I'm told". (Newswires)
  • Steven Swinford Telegraph Deputy Political editor tweets that Gove isn't in the Commons because of a personal issue. He decided
  • to stay because stakes so high - if he left it would have precipitated exodus. Now Raab's gone everything changes.. (Newswires)
  • Beth Rigby tweets "Understand that Leadsom is not resigning before business questions". (Newswires)
  • No confidence vote:
  • ITV's Peston says that Tory MP's tell him that 48 letters of no-confidence are to be lodged by lunchtime today. (Newswires)
  • Steven Swinford Telegraph Deputy Political Editor tweets Jacob Rees-Mogg just threatened to submit his letter of no confidence in
  • the Chamber, which he later submitted. (Newswires)
  • Parliament Vote:
  • DUP MP Shannon says they feel betrayed and will "certainly" vote against May's Brexit deal. (Newswires)
  • Recent reports suggest that the Parliamentary meaningful vote on Brexit could take place on December 18th. (Newswires)

Amid the chaos, some see a "straightforward" path from here:

 

 

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Update V: In comments to the BBC, Raab accused the EU of "blackmailing us" and insisted that the deal wouldn't make it through Parliament. He added that it would be better to walk away and accept short term pain than sign up to terms that could damage the country for years.

Meanwhile, the FT is reporting that Michael Gove, May's Secretary for the environment, food and rural affairs, is rumored to be May's pick to replace Raab as Brexit Secretary.

* * *

Update IV: With the eurosceptic European Research Group set to meet Thursday at 12:45 London Time, reports have surfaced claiming that the leader of the Brexiteers, Jacob Reese Mogg, is preparing to submit a letter of no-confidence in May to the 1922 committee.

Meanwhile, Wall Street analysts believe there could be more pain ahead for the pound following Raab's resignation. Indeed, the pound could fall to $1.25, according to Mizuho's head of hedge fund sales Neil Jones.

"Sentiment was sensing the cabinet would remain intact so personally I am surprised and so is the pound-dollar market," Jones said.

That would put the pound at its lowest level in 18 months.

Just in case Parliament didn't get the message yesterday, German Chancellor Angela Merkel said Thursday that there's "no chance" of more negotiations on Brexit.

However, in May's time of trouble, there is a silver lining: Many conservative MPs remain in her corner, including Amber Rudd, who resigned earlier this year in a scandal about deportation targets, and who, as Steven Swinford points out, "has every reason to be aggrieved."

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Update III: David Mundell, May's minister for Scotland, is expected to make a statement on Thursday affirming that he will not resign over May's deal, a day after he signed a letter with 12 other conservative Scottish MPs demanding that the UK's membership in the Common Fisheries Policy not be used as a bargaining chip in the negotiations.

* * *

Update II: As debate over the merits of May's deal - that is, whether it's a reasonable alternative to 'no deal' or a 'People's Vote' - rages in Parliament, the BBC has confirmed what many have suspected. This plan will need to be defeated in a vote in the Commons before May accepts that she must return to Brussels.

In an attempt to read the resignation tea leaves, Bloomberg reported that Cabinet ministers Andrea Leadsom and Penny Mordaunt were both present on the front bench in Parliament Thursday morning despite rumors that they’re considering their positions. They don't look happy, though. Meanwhile, there's no sign of Michael Gove or Liam Fox, who would normally be expected to appear in support of May.

The pound has erased some of its earlier drop; cable was down 1.4% in recent trade, compared with 1.9% at the lows.

GBP

* * *

Theresa May's draft Brexit plan isn't dead yet - but its chances of survival certainly aren't looking good.

With only 10 days until a hoped-for EU summit, the government of Theresa May lost a key senior official Thursday morning when Brexit Secretary Dominic Raab, the senior cabinet official who would have been responsible for selling the plan to the House of Commons, tendered his resignation, saying he could not in good faith support May's draft plan. His resignation comes after May's cabinet reluctantly rubber-stamped the plan Tuesday night following threats from the EU to cancel a planned summit, which would have dramatically increasing the odds of a "no deal" Brexit.

The pound is now down 1.4% against the dollar to $1.2809, and looked set to test its October lows.

Raab

In his resignation letter, Raab (the second Brexit secretary to quit May's government in the past six months) said he couldn't support the deal for two reasons: Its treatment of Northern Ireland would be a "very real" threat to the integrity of the UK, and the indefinite backstop would effectively grant the EU veto power over when the UK could leave.

Raab's resignation doesn't necessarily mean that May is toast - he said in his letter that his respect for the leader "remains undimmed." But signs that Raab's departure could trigger a cascade of resignations have already emerged as, roughly an hour after news of Raab's resignation broke, Esther McVey, May's secretary of state for work and pensions, also resigned (though her departure from May's government was somewhat less surprising).

With McVey gone, Bloomberg warned us to keep an eye out for more Cabinet dominoes: Penny Mordaunt, Andrea Leadsom and possibly  Michael Gove, three senior ministers who have reportedly expressed doubts about the plan, could all resign, fearful of being outflanked.

Three junior ministers have also quit: Shailesh Vara, the minister of state at the Northern Ireland Office, resigned over the deal Thursday morning, and Suella Braverman quit as a junior Brexit minister. Anne-Marie Trevelyan also resigned her role as parliamentary private secretary.

This latest wave of resignations follows former Transport Minister Jo Johnson's (brother of Boris) decision to resign on Friday. Johnson warned that the UK was "barrelling towards an incoherent" divorce and demanded another referendum - what has been termed a "People's Vote" by remainers - on May's draft deal that would effectively become a second Brexit vote.

As frustrations with the deal grow, Conservative MP Anne Marie Morris told Sky News that she has submitted a letter of no confidence to the 1922 Committee. 48 letters would be needed for May to face a leadership challenge.

May is expected to deliver a statement in response to the resignations, where she will reportedly insist that "nothing has changed."

By resigning, McVey and Raab can now vote in Parliament against May's deal.

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With more resignations likely ahead, Sky News has compiled this helpful list of everyone who has ever resigned over Brexit:

Esther McVey, work and pensions secretary

Dominic Raab, Brexit secretary

Shailesh Vara, Northern Ireland minister

Jo Johnson, transport minister

David Davis, Brexit secretary

Boris Johnson, foreign secretary

Steve Baker, Brexit minister

Guto Bebb, defence minister

Ben Bradley and Maria Caulfield, Conservative Party vice-chairs

Scott Mann, Robert Courts, Andrea Jenkyns, Chris Green, parliamentary private secretaries

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