There will be a collective shaking of heads this morning after we learn the cabinet is "fully behind" the PM's Chequers plan (HERE). On Monday morning The Telegraph were gleefully telling us a majority of the cabinet were now in favour of a Canada style FTA (HERE). Raab was on record this weekend describing the EU as "stubborn". They have nothing on Theresa May. Being firm and sticking with your founding principles is one thing, but refusing to budge when it's quite clear you're in the wrong and are headed for certain failure is another. This is stubbornness.
We are in an Alice in Wonderland world at the moment. May still doggedly hanging on to the hope the EU will accede to something like Chequers and talking to reporters on her way to the UN yesterday she appeared to say no deal was actually preferable to a Canadian type FTA (HERE). This will surprise Canada who spent five years apparently negotiating something that was worse than what they had.
Gary Gibbon on Channel 4 News said the same thing and Owen Bennet is also reporting it over at CityAM (HERE) although I'm not convinced it's exactly what Theresa May meant. But her comments, whatever they were, have been interpreted that way by members of the press and Downing Street haven't clarified things. It's quite ridiculous to suggest that no deal is better than a Canada style FTA. This is rather like saying if I can't have everything I won't have anything. It doesn't make any sense.
The EU are now circulating a document internally, which Reuters (HERE) claim to have seen offering a Canadian FTA and going some way to spelling out the reasons why May's Chequers proposal won't work. It does not appear to contain any counter proposals as May hoped, at least none are reported.
Meanwhile, the clock is ticking.
After the party conference things will start to hot up. It seems unlikely that either side will want the negotiations to go down to the wire next March. It would give business no time to prepare and will only turn a very bad situation into a catastrophe. I expect the EU to start forcing the issue. Unless new, serious and workable proposals are on the table by mid October I can see Barnier announcing the talks are at an end.
The markets will react badly. Sterling is already looking nervous against the dollar and the euro. Every bit of negative news causes a drop, positive news brings a slight rally. A bombshell announcement of no deal would send it down significantly. Banks and businesses will trigger relocation plans and take flight. Supply chains will start to be reconfigured to avoid cross border trade as much as possible.
In these circumstances, the EU will calculate the pressure on the UK government would be enough to force it back to the table. And it perhaps would make it easier for those calling on Mrs May to get tough to see what a weak hand she is playing, albeit she is playing it very badly indeed.
