Blog: UK Cabinet heavyweights urge Brexit compromise – POLITICO.eu

LONDON — As the Brexit game of chicken nears the end game, some of Boris Johnson’s top team think it’s time to strike a deal.

Chancellor Rishi Sunak and Cabinet Office Minister Michael Gove are among a group of senior government figures now urging caution over a looming no-deal scenario which many observers say could be disastrous for the U.K. economy, according to government officials.

And while officials say that the resignation of two senior advisers in recent days — including the prime minister’s closest aide Dominic Cummings — had nothing to do with Brexit, it may have given Johnson more room for maneuver. Both Cummings and communications chief Lee Cain were part of the Vote Leave team that won the referendum and propelled Johnson’s rise to power. They have also been key figures in a powerful Downing Street faction that has often urged an uncompromising response to demands from Brussels for more movement in the talks from the U.K. government.

After weeks of deadlock over fishing rights and state aid rules, officials in London and Brussels say that now, the main sticking point in the talks is the EU’s demand for a “non-regression” clause in any eventual trade deal. That would prevent the U.K. undercutting the EU in future by requiring a minimum level of standards in certain areas.

Face-to-face talks will end in London on Friday and are expected to pause for the weekend before resuming in Brussels Monday. EU officials are pointing to a videoconference between EU leaders next Thursday as the informal deadline for the U.K. to decide.

Johnson must decide whether to keep negotiating beyond that date in the hope of obtaining EU concessions by running down the clock, or accept the non-regression clause that some Brexiteers argue would severely curtail the U.K.’s freedom to make its own rules. 

Sunak and Gove — both Brexiteers themselves — are among those in Cabinet more inclined toward getting a deal over the line soon, according to a government official and a second person familiar with the talks. David Frost, Johnson’s Europe adviser and lead negotiator, is more inclined to hold out for a better offer from the EU, according to a third official. 

The British premier is wrestling with the choice as he tries to manage infighting in Downing Street that burst into the open this week with Cummings and Cain announcing they would step down. Tory MPs are furious at the chaos among the prime minister’s top aides just as the Brexit process is reaching a key decision point and the country is struggling to deal with a record number of daily coronavirus cases.

The third government official insisted that Brexit had nothing to do with the row within Downing Street, saying “no-one internally has cited Brexit as a reason for any of this.” But the same official admitted Frost “isn’t always on the same page” as Gove. “I think it’s fair to say in terms of overall approach, Frost is generally harder-nosed. Gove is more worried about trying to make sure there is a deal. Not at any cost, but he probably sees it with a bit more urgency than Frost,” the official said. Sunak, meanwhile, was said by a fourth official to be anxious about the impact of a no-deal scenario. An official close to Frost told POLITICO’s London Playbook earlier this week that he had no plans to resign.

Signed up to no deal

The government’s official position is that it wants a deal but is perfectly happy to take the no-deal route if necessary. A senior government figure said “most people in Cabinet want a deal if at all possible” but pointed out that all Cabinet ministers “signed up to deal or no deal” when they took their jobs. “The prime minister would be pretty upset if any of those Cabinet ministers came out wobbling now,” the government figure added.

Publicly, ministers say it is time for the EU to make concessions. Speaking to the House of Commons Thursday, Gove insisted the U.K. had already made concessions and it was time for the EU to show “flexibility” in the negotiations. “In particular, there needs to be a full recognition that we are sovereign equals. And any attempt to continue to tie the U.K. into EU processes or to extend EU jurisdiction by other means would be quite wrong,” he said.

However, concerns about the impact of no deal are being fueled by City of London regulators, who fear the EU might decide not to grant equivalence to Britain — severely curtailing the ability of U.K. based financial firms to do business with EU-based clients. That would be a big blow to the U.K.’s financial institutions already reeling from the economic impact of COVID-19. Financial stability wouldn’t be guaranteed by a trade deal, unless the EU agreed to meet the U.K.’s offer to grant equivalence in financial services alongside it. 

Repeated briefings on the issue at the Treasury from regulators have caused a degree of alarm about the impact on financial markets and banks if there is no breakthrough in Brexit talks. While the EU has previously granted temporary fixes ahead of key Brexit deadlines, the risks this time are greater, and the determination in Brussels not to concede any ground on the issue is more pronounced, people familiar with the briefings said.

Manfred Weber, the leader of the center-right European People’s Party group in the European Parliament, said the EU needed clarity from Johnson now.

“I see what is happening now in Downing Street,” Weber told the BBC Radio 4’s “Today” program. “We can also see this as a quite chaotic situation where we don’t have an idea what is really the line in Great Britain. So don’t tell us we should be ready for compromise. We need a clear idea from Boris Johnson now and I think it’s now time for leadership … to achieve an easy trade deal now. It’s time to take over responsibility and come to a common understanding.”

The prime minister’s official spokesman said Friday it is “simply false” that Cummings’ announced departure would soften the government’s Brexit strategy. The negotiating teams are “working very hard to try to bridge the significant gaps” that remain in the talks, on level playing field and fisheries, he added. “The transition period will end on December 31, there is no doubt about that whatsoever. We would like to get a deal but it has to be one that respects the sovereignty of the United Kingdom. If we’re not able to reach a free trade agreement, we will leave on Australian-style terms.”

Emilio Casalicchio, Anna Isaac and Barbara Moens contributed reporting.

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