Europe Politics

Boris Johnson's new Brexit offer now faces crucial test in Brussels

Key Points
  • Brexit is now hanging in the balance after the U.K. government submitted last-ditch proposals to the EU as the departure date of October 31 fast approaches.
  • The proposals involved new plans to get around the so-far intractable issue of the Irish "backstop" designed to prevent a hard border on the island of Ireland.
  • The new proposals would see would see Northern Ireland (a part of the U.K.) stay in the European single market for goods but leave the customs union.
European Commission President Jean-Claude Juncker (R) poses with British Prime Minister Boris Johnson prior to a meeting at a restaurant on September 16, 2019 in Luxembourg.
Pool | Getty Images News | Getty Images

Brexit is now hanging in the balance after the U.K. government submitted last-ditch proposals to the EU as the departure date of October 31 fast approaches.

The proposals involved new plans to get around the so-far intractable issue of the Irish "backstop" designed to prevent a hard border on the island of Ireland. The new proposals would see would see Northern Ireland (a part of the U.K.) stay in the European single market for goods but leave the customs union. This would mean customs checks would take place but these would be away from the border, according to the U.K. government.

The EU cautiously welcomed some of the proposals but said more work needed to be done on other parts of the plans, such as substantive customs rules, Reuters reported. EU Commission President Jean-Claude Junker said Wednesday that he welcomed the U.K. Prime Minister Boris Johnson's "determination to advance Brexit talks."

Johnson presented the proposals to a fractious U.K. Parliament on Thursday, telling the lower chamber that they were a compromise that achieved a deal and honored the referendum result.

"They do not deliver everything that we would have wished. They do represent a compromise," Johnson said. "But to remain a prisoner of existing positions is to become a cause of deadlock rather than breakthrough." He said the government had "made a genuine attempt to bridge the chasm, to reconcile the apparently irreconcilable. And to go the extra mile as time runs short."

Sterling was trading higher against the dollar, at $1.2315, following the speech.

Passing Parliament

Lawmakers rejected a Brexit deal struck by Johnson's predecessor Theresa May largely because Brexiteer MPs (Members of Parliament) felt it kept the U.K. too closely aligned with the EU, while remainer MPs felt that the U.K. would be better off remaining a full member of the bloc.

Opposition Labour leader Jeremy Corbyn poured scorn on the proposals saying no Labour MP could support what he called "such a reckless deal." He also added that the proposals would be rejected by Brussels and Westminster.

Still, a majority of lawmakers want a deal and they have blocked Johnson from taking the U.K. out of the EU without a deal on October 31. If no deal is in place by October 19, Johnson has been bound by law to ask the EU for a delayed departure date. It's not guaranteed the EU will agree to another delay, however.

Even if the EU agrees to this amended Brexit deal, it's far from certain that a majority of the British Parliament will approve the deal. Although, the U.K.'s Telegraph newspaper reported Thursday that around 25 opposition Labour MPs could back it along with Northern Ireland's Democratic Unionist Party, Conservative lawmakers and other rebel Brexiteer MPs.

Nonetheless, there are rumblings in Europe that the proposals are not good enough. A European Parliament Brexit group said Wednesday that the plans "do not represent a basis for an agreement," according to the draft of a statement seen by Reuters ahead of release later in the day.

Ireland's Foreign Minister Simon Coveney said on Thursday that if Britain's latest proposals were its final offer then a no-deal Brexit was likely, telling parliament: "If that is the final proposal, there will be no deal," Reuters reported.

Some experts believe the technicalities could get the better of Johnson's proposals when it comes to whether the other 27 EU members could accept Britain's new proposals.

Oliver Harvey, head of Brexit research at Deutsche Bank, said in a note Wednesday that "at face value, we do not expect the EU27 to agree with the U.K. proposals as they will require border checks between the North and Republic of Ireland and compromise EU Single Market integrity."

"The crucial question for markets, however, is whether these proposals represent the final offer from the U.K. side, or the basis for intensive negotiations over the next two weeks. If a deal can be reached with the EU27, parliamentary hurdles to ratification will be reduced, as the EU27 is likely to declare they will not accept a further extension request," he said.

VIDEO4:0604:06
EU should be flexible on Irish border for 'sake of peace,' expert says

But Pieter Cleppe, head of the Brussels office at euroskeptic think tank Open Europe, told CNBC Thursday that the EU should consider the proposals — which he characterized as a big concession from the U.K. — and try to be flexible when it comes to the Irish border as a lot was at stake — including peaceful relations between Northern Ireland and the Republic.

"If you look at the EU's external customs and regulatory border this is by no means perfect. There are many holes in that border so you could wonder why (can't the EU) be flexible when it comes to the Irish border as well, for the sake of peace," Cleppe told CNBC's Willem Marx Thursday.

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