Merkel Upends U.K. Skeptics and Comes to May’s Aid on Brexit

Theresa MayTheresa May speaks to journalists as she arrives for a meeting of European Union leaders in Brussels, Belgium, on Oct. 19, 2017. Photographer: Jasper Juinen
  • Merkel Upends U.K. Skeptics and Comes to May’s Aid on Brexit

German Chancellor Angela Merkel offered Theresa May the political cover she’s been asking for to take further steps in Brexit talks, calling on both sides to move so that a deal can be reached by year-end.

The U.K. prime minister signaled she’s willing to offer more on the divorce bill, according to a U.K. official. May urged leaders at a European summit to help her find a deal she could sell to skeptics at home, and her counterparts responded with words of encouragement — though no concrete concessions.

Merkel said there’s “zero indication” that Brexit talks won’t succeed and she “truly” wants an agreement rather than an “unpredictable resolution.” She welcomed the concessions May made in a landmark speech in Florence last month and said she’s “very motivated” to get talks moved on from the divorce settlement to trade by December.

“Now both sides need to move,” she told reporters after hearing May speak at dinner, in a shift of rhetoric for the EU side, which has previously insisted that it’s up to the U.K. alone to make the next move.

Talks are deadlocked over the issue of the financial obligations, eating into the limited time available to forge a trade deal before Britain leaves the bloc. The initial offer on money that May made in Florence — about 20 billion euros ($24 billion) and some unspecified additional commitments — hasn’t been converted into detailed negotiating positions.

Helping Hand

EU leaders are aware of the fragility of May’s position — she’s trying to hold onto her job after a failed election and keep a squabbling Cabinet together. That’s why they offered her words of encouragement on Thursday, according to an EU official speaking on condition of anonymity.

May delivered her “best performance yet,” Maltese Prime Minister Joseph Muscat told reporters Friday morning. “It conveyed a warm, candid and sincere appeal that she wants progress to be made, that she has moved in her position so I think that was appreciated.”

The conclusions of the summit also point to possible progress before year-end, while demanding more concrete steps from the U.K. The tone of the summit was friendlier than earlier encounters, with footage of May chatting to Merkel and French President Emmanuel Macron with an ease that contrasted with previous moments of awkward solitude.

The chancellor’s upbeat tone on Brexit was in marked contrast to Germany’s portrayal in the U.K. media as the principle obstacle to Britain’s attempts to shift negotiations onto trade and a transition period.

In reality, Merkel has rarely commented on Brexit in the past two months or more as she fought for re-election to a fourth term. Even when she has weighed in, the chancellor tended to adopt a matter-of-fact approach that stuck to the facts.

‘Absurd’

“So what I heard today was a confirmation of the fact that, in contrast to what you hear in the British press, the process is moving forward step by step,” Merkel said. “You get the impression that after a few weeks you already have to announce the final product, and I found that — to be very clear — absurd.”

May’s underlying message to leaders was clear: she cannot afford to take home a bad deal, or to wait much longer for a meaningful offer, because she needs to convince a skeptical public at home.

“There is increasingly a sense that we must work together to get to an outcome we can stand behind and defend to our people,” May told the 27 other EU leaders, her officials said. “The clear and urgent imperative must be that the dynamic you create enables us to move forward together.”

She also pointed out that EU leaders will need to be able sell the results of talks to their own people. Each country has its own sensitivities on Brexit: those with large migrant populations in the U.K. want a good deal on citizens’ rights, others are keener to strike a good trade deal.

Some EU leaders warned there’s much to do.

“There is at least some rhetoric progress but unfortunately we need to come to tangible conclusions because uncertainty is not good for the continent,” Austrian Chancellor Christian Kern told reporters on Friday. “It’s up to the British government to propose something that’s a basis and a good ground for further progress.”

The leaders are acutely aware that they wouldn’t be able to explain to their voters if they let Britain off too lightly on the bill. May has agreed to pay into the budget for two years after Brexit, which amounts to about 20 billion euros, and also meet the U.K.’s financial obligations more broadly.

Those additional commitments would add up to another 20 billion euros, people familiar with the discussions said last month. The EU side has floated numbers closer to 60 billion euros.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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