UK White Paper resolves little ahead of October deadline, says Ian Taylor

The UK government’s Brexit White Paper published on Thursday is optimistically entitled ‘The Future Relationship between the UK and the EU’.

It drew a guarded welcome from travel and tourism organisations, although the reception in Brussels was more lukewarm. The proposals appear to conflict with the red lines set by Brussels.

The outcome remains unclear and not just because US President Trump immediately torpedoed any confidence the proposals might speed a US-UK trade deal.

Theresa May has been forced to abandon plans for a tight relationship with the EU on financial services, to the rage of the City of London.

The government has had to accept that a new framework for cooperation on services, which will include travel, means: “The UK and EU will not have current levels of access to each other’s markets.”

An unnamed government source described the plan for the City as “cohabiting, without the same commitment as marriage”.

This could be a description of Britain’s overall future relationship with the EU.

It contrasts with the proposal for a free trade area in goods which would see Britain apply the EU rule book and collect tariffs on the EU’s behalf to maintain a “frictionless” border.

‘A vision of a soft Brexit’

Rarely has the cliché “a week is a long time in politics” been so apt.

The view on Monday morning had been that May had “strong-armed her cabinet into backing a new vision for a soft Brexit”.

The business newspaper the Financial Times had declared on its front page: “May wins backing for ‘soft’ Brexit after facing down cabinet rebels.”

Inside, the paper reported: “Theresa May took on the Eurosceptics in her cabinet [in] a carefully planned political coup . . . and they blinked.”

That was before foreign secretary Boris Johnson added his resignation to that of Brexit secretary David Davis on Sunday night.

By Tuesday, the headlines had changed to: “May clings to power.”

The Financial Times now suggested: “[The resignations] brought forward the day of reckoning for the government.”

Not since 1982 and the dog days of Margaret Thatcher – when she was then the most-unpopular UK prime minister in history – had two cabinet ministers resigned within 24 hours.

There appears no unity anywhere in government, even among the cabinet members who resigned – since Davis questioned why Johnson had quit.

May was reportedly applauded at a meeting of the influential Tory 1922 Committee of backbench MPs on Monday night. But one MP present at the meeting suggested this signalled only that: “She is screwed.”

A nudge towards Norway?

The Financial Times described the government plan laid out in the White Paper as “a firm nudge towards a Brexit end-state that would look more like Norway than Canada”.

It noted: “Business played a key part in changing the dynamics.”

Ahead of last week’s crunch Cabinet meeting, companies like Jaguar Land Rover, Nissan and Airbus issued a series of warnings about the dangers of a hard Brexit and the need for “a common rule book on goods”.

This “commercial onslaught [was] encouraged privately by business secretary Greg Clark”, according to the Financial Times.

Yet rebel Tory MPs now threaten to scupper the customs scheme by blocking an exit deal.

They insist they are ready to trigger a leadership challenge, which requires the backing of 48 Tory MPs.

May faces a couple of tricky votes in Parliament next week, but the real crisis will come in the autumn.

It will take only a handful of Conservative MPs to torpedo a deal and create what new foreign secretary Jeremy Hunt described as “Brexit paralysis” unless May can win the wholesale support of Labour – its leaders and MPs.

But why should Labour save the government? Bringing the government down is about all the Labour Parliamentary Party can agree on.

Whitehall sources confirmed a fresh focus on planning for ‘no deal’ on Brexit – with the “no-deal unit” at the Department for Exiting the EU “suddenly expanded” and officials assigned to plan “what messages the government would put out to the public”.

May could be left with no choice but to try to extend the exit process – and perhaps call a general election.

What if May falls?

Boris Johnson is the leading figure among Brexiters, yet he is deeply unpopular among Tory MPs and far from a position to win the leadership.

He appears to have been forced into resigning by Davis quitting. Had he not, Johnson would surely have forfeited his last chance of leading the Tories.

His hope will be to re-establish his credentials between now and the autumn.

A key consideration will be that the first MP to challenge May will draw the fury of the party. It is normal in such circumstances for a no-hoper to make the initial challenge. The calculation by May supporters is that no one will dare.

But the problem for May was summarised by her former ambassador to the EU Sir Ivan Rogers, who said: “She is caught between two intolerable options.”

My guess is Johnson would not win the leadership, and the alternative Brexit candidates – environment secretary Michael Gove or Jacob Rees-Mogg – have even less chance of winning a general election.

The EU’s official response to the UK proposals has been muted. After all, they leave everything to be resolved.

But one unnamed EU official described the White Paper as “The fudge of the century.” Another “senior EU diplomat” suggested: “It is difficult to see how the UK ideas are workable.”

A third said of the plan: “It looks horribly complicated. I don’t see how it can survive.”

Nonetheless, May will now spend the summer ‘selling’ the plan around Europe and trying to convince her own MPs to support whatever emerges.

Political commentator Steve Richards, who presents BBC radio’s Week in Westminster, forecast the current impasse when he addressed UK corporate travel leaders last month.

Richards told the Guild of Travel Management Companies’ (GTMC) conference: “Europe has brought down three British prime ministers – Thatcher, Major and Cameron – and May will be another.”

He warned: “There has to be an agreement by October. Will there be a clear idea of the arrangements by then? I don’t believe there can be.

“They will say ‘We’ll sort out the detail in the transition period’. Will Parliament accept that? May will threaten to go in the attempt to win the vote. If she loses, she would have to go.”

So, May will stumble on to October when she may well fall. A Tory contest to replace her will satisfy no one and, sooner rather than later, there will be an election.

I’m told Labour MPs expect a general election in the spring. The Tories will be irrevocably split. Whoever replaces May, Labour’s Jeremy Corbyn is likely to win. Watch the pound fall then.