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Theresa May on Monday bowed to pressure from pro-European Conservatives by offering the British parliament a full vote on a final Brexit deal with the EU, although ministers insisted it could not be used to halt Brexit.
Meanwhile Mrs May urged EU business leaders at a meeting in Downing Street to help her make the case for a breakthrough in Brexit talks at a European summit next month, as she tried to keep a grip on the exit process.
The pound fell sharply on Monday following weekend reports suggesting that Mrs May was losing control of her party — with up to 40 Conservative MPs said to be ready to sign a letter of no confidence, and Eurosceptic cabinet ministers said to be pushing her to take a tougher line on Brexit.
The British currency dropped by as much as 0.9 per cent as it fell below $1.31, before recovering some of the losses to trade down 0.6 per cent just above the $1.31 mark. Against the euro, sterling was 0.6 per cent weaker with one unit of the common currency buying just under £0.89.
Mrs May’s responded to the most imminent problem — the possibility of defeat in the House of Commons on her flagship EU withdrawal bill terminating the supremacy of EU law — by ordering what Labour’s shadow Brexit secretary called “a significant” climbdown.
In a concession to Labour and pro-European Tories, David Davis, Brexit secretary, said the government would allow MPs to vote on a second piece of primary legislation: a withdrawal agreement and implementation bill.
Mr Davis said the move would answer EU concerns about protecting the rights of European citizens living in Britain by enshrining the terms of the withdrawal agreement in primary UK law. It could be the first of a number of concessions.
But he said Britain would leave the EU in March 2019 and that if parliament rejected the exit deal negotiated by Mrs May and a possible transition deal then Britain would leave without any deal at all — a move that would threaten potential economic chaos.
He said that while any deal agreed by Mrs May in Brussels “will only hold” if MPs approve it, he said it would not alter the fact the UK was leaving the EU.
Mr Davis said the government’s “principal policy aim” was to agree the Brexit divorce terms by October 2018 to give parliament time to consider the deal, but he could not guarantee that MPs would be able to vote on legislation before Brexit Day — March 29 2019. He was also unable to say whether MPs could vote on a “no deal” outcome of talks.
Mr Davis’s aides said Mrs May would not be forced to return to Brussels to try to negotiate a better deal if parliament amended the exit legislation; parliament would effectively be given a choice between the deal on the table or no deal.
Earlier in the day Mrs May tried a new tactic to advance her search for a Brexit deal, asking EU business lobby groups to make the case in Europe for an early agreement, including on a transition arrangement after Britain leaves in 2019.
Attendees at the Downing Street meeting said Mrs May urged them to talk to their governments and ask for “openness” to the British position, but they emphasised that the responsibility for progress lay firmly with her and her government.
The move reflected Mrs May’s concerns that her conciliatory Florence speech has not yet secured a breakthrough. She hopes EU leaders will agree to move on to a second phase of talks in December, opening the way to a future trade deal.
“She told us that we should try to sell the Florence speech [to our governments],” said one of the continental European attendees at Monday’s No 10 meeting.
Meanwhile Simon Coveney, Ireland’s foreign minister, told Irish reporters that Dublin would not be pushed aside in the Brexit talks, saying he did not accept suggestions that London was surprised when EU negotiators “for the first time crystallised what they are asking for” on the Irish border question.
A paper from the European Commission last week said Britain may have to accept that Northern Ireland may need to remain inside the EU customs union and single market to avoid a “hard border” in Ireland after Brexit.
“Some people hoped that Ireland and the EU taskforce would simply allow this issue to drift into phase two in the hope that it would be resolved through some form of trade agreement or trade partnership agreement in the future,” Mr Coveney said. This was not viable, he added.