Prime Minister May Seeks Another Brexit Delay, Setting Up Battle With EU

Prime Minister Theresa May has asked the European Union to delay Brexit until June 30, setting up a battle with the bloc ahead of a key summit next week.

May wants an extension to June 30 and aims to avoid holding European elections next month, which would be politically toxic at home. But the EU’s view is that if there is an extension, it should be longer, given the deadlock in the U.K. France was quick to say it was “premature” to talk of an extension.

The pound rose as much as 0.4 percent immediately after the letter was published, before paring gains.

May cited talks with opposition Labour Party Leader Jeremy Corbyn aimed at breaking the Brexit impasse as a reason for further delay in her letter to EU Council President Donald Tusk. It’s the same length delay she asked for last month, which the bloc rejected.

“It is frustrating that we have not yet brought this process to a successful and orderly conclusion,” May wrote. “The U.K. government remains strongly committed to doing so.”

With her options dwindling, May is desperately seeking to get an agreement through Parliament, which has rejected it three times.

Unable to convince her allies to back her own deal, she’s turned to Corbyn for help. Talks are yet to show much sign of progress, even as May is said to be willing to discuss proposals she’s long rejected, including a second referendum.

In her letter, May said the government would prepare for European parliament elections — due to be held between May 23 and May 26 — in case Parliament hasn’t ratified the Brexit divorce deal in time, though she reiterated her reluctance for the U.K. to take part.

May said she’s trying to agree a timetable for legislation with the Labour Party which will allow it to pass through Parliament in time for the elections to be canceled.

“It is in the interests of neither the United Kingdom as a departing Member State, nor the European Union as a whole, that the United Kingdom holds elections to the European Parliament,” May wrote.

May said her discussions with the opposition are focused on the future relationship with the EU, and not on reopening the Withdrawal agreement she negotiated with the bloc. That chimes with the EU position that it can rewrite its declaration on future ties but won’t reopen the divorce deal.

“If a consensus is going to be found, compromise will be needed on all sides, in the national interest,” she wrote.

Tusk favors offering the U.K. a one-year extension, though some governments opposed such a long delay, officials said. His proposal would would include an escape clause to allow the U.K. to leave the EU early when the deal is approved.

The EU’s remaining 27 leaders, who meet May in Brussels for a summit on Wednesday, have to agree on any offer unanimously and it’ll be up to them to forge a common position. France is leading a small group of countries opposing a long extension, but officials said they don’t expect any leader to veto a delay outright. France said the year-long delay proposal was a “clumsy trial balloon.”

The EU has previously said any long extension would be conditional on a “clear plan” for the way forward, or a political “event” such as another referendum or general election. But May’s efforts to form a cross-party position with Corbyn, and pledge to hold votes in Parliament on the desired outcome, will probably be enough.

Without an agreement at the EU summit, the U.K. would leave the bloc on April 12 if Parliament doesn’t approve the deal before then — crashing out into legal limbo that would snarl trade and freeze markets. That’s a scenario Parliament is working to prevent, and May has said she won’t lead the country out of the bloc without a deal unless lawmakers consent to it.

While any extension would be welcomed by most businesses, which are desperate to avoid a no-deal outcome, a delay until June 30 would still have an economic cost. The risk of opting for a relatively short extension is that companies and consumers remained trapped by uncertainty, and continue to defer spending and investment decisions until they get more clarity. Meanwhile, Bank of England policy makers would also be forced to continue their current holding pattern.

–With assistance from David Goodman.

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