The Brexit-related chaos of the past month sent European stocks reeling and made the pound "untradeable" (at least, for a brief time). But traders could have avoided these headaches if they had simply looked past the squabbling to understand a larger truth: Most of the squabbling between May, the Tory Brexiteers and the EU was essentially political theater orchestrated to make a revised Brexit plan where the UK achieves something closer to the "Norway-plus" model politically palatable.
And after markets were given their first peek behind the curtain earlier this week after reports that the EU wouldn't consider a renegotiation until Parliament rejects the deal, Bloomberg has followed up with the latest indication that May's insistence on her deal being the "best and only" deal on the table was just an example of the prime minister saying what needed to be said.
Believing that her deal stood any chance of passing would border on delusional, so any practical tactician - and by all accounts, May is nothing but practical - would, accepting this, pivot toward the next-best thing: doing "everything in their power" to strengthen the UK's negotiating position to win more favorable terms. And it appears May has done just that.
Because, according to Bloomberg, just days after her Brexit plan was "finalized" during a meeting of EU states over the weekend, the prime minister is reportedly ready to public acknowledge a longstanding reality: That, ultimately, Parliament must be allowed to write their own deal if anything is expected to pass. And to that end, May has reportedly dropped her resistance to parliamentary rewrites, and is instead moving toward holding a "meaningful vote", which would allow Parliament to propose amendments to her deal before voting on which amendments to accept, and which to deny, before approving the revised agreement.
Traders welcomed the news, as the pound climbed back above $1.28 to just below its highs from Tuesday.
Given the EU's intransigence on the issue, this appears to be the best course for ensuring that the UK isn't trapped in the trade bloc by the "Irish backstop."
The plans were disclosed by a U.K. official who asked not to be identified, because the plans are private. Parliamentary business managers from the different parties are still hammering out the details of how the vote will be held, but the government’s aim is to produce a plan that its opponents, internal and external, can’t object to.
Officials believe that no alternative to May’s option will command a majority in the Commons either, and a series of votes on the amendments could demonstrate that. Labour members are likely to be ordered not to support a second referendum, for example.
If other options are indeed voted down, it will add force to May’s argument that hers is the only way to avoid crashing out of the EU with no deal.
For those who aren't intimately familiar with parliamentary proceedings in the UK, here's a rundown of how the "Meaningful Vote" would play out:
- Starting Tuesday Dec. 4, there will be five days of eight-hour debates, with a break from Dec 7-9.
- Each day’s debate will be led by a different Cabinet minister, focusing discussion on their brief.
- Voting will start at 7 p.m. on Tuesday Dec. 11.
- The Commons will vote on a series of amendments to the government’s motion, likely to include calls for another referendum, or for the government to seek a customs union with the European Union.
- Each vote will take around 15 minutes.
- Finally, the Commons will vote on the government’s motion, including any amendments that passed.
But just as May must maintain the perception that she is doing everything she can to pass the deal in its current form, the EU can't be seen giving the UK a pass. So shortly after Bloomberg published its report, the Guardian, a British newspaper, followed up with what sounded like a warning: If the Commons doesn't accept the deal in its current form, the EU will start preparing for a "no deal" Brexit scenario. EU leaders quoted in the story insisted that negotiations have been closed, and that the notion the deal could be changed or reopened is "completely unrealistic."
Brussels will also plough on with the ratification process of the withdrawal agreement in the European parliament to ensure the bloc is prepared for whatever British politics throws up in the coming months.
"Everyone needs to take their own responsibility," an EU source said, in an echo of comments recently made by the EU’s chief negotiator, Michel Barnier.
The EU is rallying around Jean-Claude Juncker’s insistence that the deal on the table is the "only one possible" given the UK’s decision to leave the single market and customs union.
The idea that the bloc would revise the withdrawal agreement, including the contentious backstop solution for avoiding a hard border on the island of Ireland, is described as "completely unrealistic."
But the objections of the other EU states would likely do little to dampen support for a "pivot" toward a plan that would lay the groundwork for "Norway plus", an alternative that has been gaining traction in recent days.
The possibility of the British government pivoting towards membership of the European Economic Area (EEA) and the European Free Trade Association following a rejection in parliament of the prime minister’s deal is gathering momentum in the Commons.
Under the plan, known as "Norway-plus," with reference to the Nordic country’s arrangements with the bloc, the UK would also stay in a customs union with the EU.
And as if they needed one more reason to oppose the deal, the Financial Times reported Wednesday that May's own government has forecast that her Brexit plan would shrink the UK's GDP by 4 percent over the long term. But this forecast is essentially a garnish for Brexiteers'. They already have all the leverage they need to ensure that their preferred deal wins out.