Extending Transition to Fix Border Floated Again: Brexit Update

(Bloomberg) -- Prime Minister Theresa May heads into Brussels for a summit with fellow leaders with Brexit talks at an impasse over how to avoid a policed border with Ireland. With the U.K. scheduled to leave the European Union in March 2019, what’s become known as the “Irish backstop” has proven to be the biggest obstacle to a negotiated withdrawal deal.

May is scheduled to meet EU Council President Donald Tusk at 5:45 p.m, local time, in Brussels. At 7 p.m., she will address the bloc’s 27 leaders, who will then convene over dinner without her to discuss the next steps in the process.

France Sees Hope After U.K. Concessions (10:38 a.m.)

French Economy and Finance Minister Bruno Le Maire says there is hope for a Brexit deal in the “coming weeks” after the U.K. has made concessions to the Chequers blueprint.

“I hope, perhaps not at this European Council meeting that starts in a few hours, but in the coming weeks we can find an agreement with the British,” Le Maire said in an interview on Radio Classique on Wednesday.

“There is a clear objective: we want a deal. A deal is in everyone’s interest and I think we are not far from an agreement,” Le Maire said.

Pound Falls Ahead of Brussels Meeting (10:30 a.m.)

The pound slipped in early trading, with sterling falling as much as 0.3 percent to $1.3141. It weakened 0.24 percent to 88 pence per euro.

Fox Doesn’t Back Longer Transition (8:45 a.m)

Liam Fox doesn’t back a longer transition period, according to a government official, knocking down a report in the Times that he does.

An official with knowledge of the U.K.’s position said the nation’s stance on extending the implementation period hasn’t changed. The U.K. is not calling for an extension to the implementation period.

Extend the Transition? (8:01 a.m.)

Could an extension to the transition -- the 21-month grace period that’s due to follow Brexit day -- be the answer?

The EU’s chief Brexit negotiator, Michel Barnier, has raised the possibility of a one-year extension, according to a person familiar with a briefing to the EU’s European affairs ministers.

The idea is that it would buy more time to sort out the Irish border issue. However, Barnier’s offer was conditional on the U.K. accepting that a customs union would be the basis for future relations, the person said. And that’s so far impossible for the Brits to accept.

This idea started being kicked around last week, when Bloomberg reported that both sides were considering it.

In an interesting development, the idea seems to have one possible supporter in May’s Cabinet: International Trade Secretary Liam Fox. He is an ardent Brexiteer and his voice is an important one. His camp have been unhappy about May’s latest Brexit plans and some have indicated they could be willing to resign if she cedes too much ground to Brussels.

The Times reported that Fox suggested extending the transition period for a few more months past the end of Dec. 2020 to give more time for a free trade deal to be concluded. The paper cited an unidentified person familiar with the situation.

Coming Up:

• May engages in some verbal sparring with Labour leader Jeremy Corbyn at noon
• She is then due to address her 27 counterparts Wednesday at the start of dinner. They will then continue to talk Brexit without her. It could go late.