Brexit: All eyes are on Theresa May as pressure mounts within her own cabinet  

  • After another ministerial resignation on Friday, several cabinet members are now adding further pressure on the prime minister to come up with a plan that will not make the U.K. indefinitely part of the EU's customs union.
  • The clock will not stop. With the country due to leave the EU on March 29 next year, negotiators are running out of time to reach an agreement.
LONDON, ENGLAND - NOVEMBER 11: British Prime Minister Theresa May during the annual Remembrance Sunday memorial at the Cenotaph on Whitehall on November 11, 2018 in London, England. 
Jack Taylor | Getty Images News | Getty Images
LONDON, ENGLAND - NOVEMBER 11: British Prime Minister Theresa May during the annual Remembrance Sunday memorial at the Cenotaph on Whitehall on November 11, 2018 in London, England. 

U.K. Prime Minister Theresa May faces another test of survival this week with mounting opposition within her own close circle of senior lawmakers.

This close-knit team of politicians — called the cabinet — is due to meet Tuesday in an attempt to find a solution to the so-called Irish backstop, which has been the main stumbling block for talks over the last few months.

After another ministerial resignation on Friday, several cabinet members are now adding further pressure on the prime minister to come up with a plan that will not make the U.K. indefinitely part of the EU's customs union. Four lawmakers in favor of staying in the EU are reportedly considering their positions, according to Sky News.

Hit by uncertainty, sterling fell more than one percent against the dollar on Monday morning, plunging to $1.128. A strong dollar also contributed to the depreciation in sterling.

The Irish border

This is still the main issue preventing a formal withdrawal agreement with the EU. Both sides want to prevent a hard border between Northern Ireland and the Republic of Ireland — the only land border that the U.K. will have with the EU after Brexit.

The EU has proposed that the checks happen at the Irish Sea — which separates Northern Ireland and the rest of the U.K. — and are carried out in the least intrusive way possible. However, the DUP (the Democratic Unionist Party), the Northern Irish party that supports May in parliament, does not agree with this idea. The DUP argues that such a proposal divides Northern Ireland from the rest of the U.K. and forces Belfast to follow EU rules.

So, May has proposed to have a customs union with the EU, temporarily. A customs union is an arrangement by which its members apply the same tariffs to products imported from third countries. But the EU has rejected her idea. The other 27 EU nations want a permanent solution that will always avoid a hard border between Northern Ireland and the Republic of Ireland.

May's proposal was also not well-received by her party members. Some of them believe that a customs union with the EU, even if temporary, will restrict the U.K.'s ability to strike new trade deals.

As a result, May has more recently come up with an idea to have an independent arbitration panel, to tell her counterparts that the U.K. will not be in a customs union with the EU forever. The Times reported early Monday morning that the EU has also rejected this suggestion as it wants any arbitration to be done by the European Court of Justice.

What now?

The clock will not stop. With the country due to leave the EU on March 29 next year, negotiators are running out of time to reach an agreement.

In the best-case scenario, the U.K. government finds an agreement over a solution to the Irish border this week, paving the way for a summit with EU leaders at the end of the month.

Both sides need to decide on the withdrawal agreement — which states how the U.K. will leave the Union — as soon as possible and ideally before mid-December to ensure there is enough time for parliamentary approval across Europe and in the U.K.

The latter remains the biggest doubt in Brexit talks with deep divisions across the different U.K. political parties.

Whenever a withdrawal agreement is reached, the U.K. and the EU will then work on their future relationship, which includes their future trade arrangements.