November 8, 2018 / 12:18 PM / 10 days ago

WRAPUP 1-UK PM May dives into diplomacy in bid to clinch Brexit deal

(Adds further comment, details on agenda)

By Guy Faulconbridge and Gabriela Baczynska

LONDON/BRUSSELS, Nov 8 (Reuters) - Prime Minister Theresa May steps up attempts to court European support for a draft Brexit deal on Thursday as negotiations on securing a smooth British divorce from the world’s biggest trading bloc enter their final stages.

She will meet three other EU leaders in Brussels at a NATO dinner on Thursday and have lunch with French President Emmanuel Macron on Friday.

EU officials and diplomats tried to play down speculation on an imminent deal after an Austrian newspaper report that a deal could be reached “in the coming days” send the pound higher.

Some diplomats said they felt more optimistic than earlier in the week about seeing a deal completed this month. But one senior EU official told Reuters: “A deal is certainly not done. There’s a bit of progress on the backstop but we’ve no idea if it will fly in London. Both sides are still talking, which is good, but we haven’t been told that a deal is imminent.”

Irish Foreign Minister Simon Coveney, whose country insists on a “backstop” clause to avoid disruption on its land border with the British province of Northern Ireland, said “not by a long shot” should an imminent breakthrough be taken for granted.

Even a deal among May and her fractious ministers would not necessarily mean the EU would fall in line, he said.

For their part, British officials weighed in also, with Foreign Secretary Jeremy Hunt saying to get a deal within seven days was “probably pushing it” and a government source saying that May would probably not gather her cabinet until next week.

Nonetheless, with both sides believing a deal must be done in the coming weeks to ensure a smooth withdrawal in March, talks have become intense. May’s interior minister Sajid Javid said: “Clearly we’re in the closing stages ... The next few days, the next couple of weeks, they will be very important.”

Speculation of an imminent deal, after months of deadlock over trade arrangements that could keep the Irish border open, mounted as May’s office announced she would meet several European leaders over dinner in Brussels on Thursday.

Few officials had been aware in advance, though May had been expected in the Belgian town of Mons on Friday morning for an event marking the centenary of the end of World War One.

The NATO dinner, hosted by the U.S.-led military alliance’s Norwegian secretary-general Jens Stoltenberg and including only the Dutch, Belgian and Romanian leaders, is not in itself a forum to talk Brexit.

But being in Brussels could be a chance to see EU Brexit negotiator Michel Barnier, his boss European Commission President Jean-Claude Juncker and European Council President Donald Tusk, the summit chair who will have to call EU leaders together to endorse any deal when it is done.

After the commemoration in Mons on Friday, May is due to meet President Emmanuel Macron in France for further events.

Less than five months before Britain is due to leave the EU on March 29, a deal is 95 percent done. But officials have repeatedly cautioned they are still haggling over the backstop.

The EU wants to see a breakthrough within a week if leaders are to endorse any Brexit deal in November, official and diplomatic sources told Reuters. An EU summit tentatively scheduled for Nov. 17-18 is no longer on the cards.

After May discussed Brexit with German Chancellor Angela Merkel and EU summit chair Tusk this week, British ministers were shown the text of a deal which is 95 percent agreed.

The deal - or the lack of one - will shape Britain’s prosperity for generations to come and have long-term consequences for the European Union’s global clout.

Both sides need an agreement to keep trade flowing between the world’s biggest trading bloc and the fifth largest global economy. The other 27 members of the EU combined have about five times the economic might of Britain.

DEAL OR NO DEAL?

Ever since the shock 2016 Brexit referendum sent sterling to its biggest one-day fall in decades, the pound has been see-sawing on differing perceptions of whether a deal will be done.

May told her cabinet on Tuesday that more time was needed to clear the final hurdle standing between her and a deal: the plan to ensure no hard border emerges on the island of Ireland.

Some of her senior ministers, such as Brexiteer Michael Gove, want to see the verdict of British government lawyers on how a post-Brexit plan for Northern Ireland’s border might work. A Northern Irish political party, the DUP, which props up May’s minority government, wants the advice to be published in full.

May wants a deal - both on a withdrawal agreement and a framework for future ties - before year-end as she must get the deal approved by the British parliament. The EU holds a regular summit on Dec. 13-14.

“We are not there yet. The clock is ticking. The choices need to be made now on the UK side,” EU negotiator Michel Barnier told reporters on Wednesday.

If May fails to clinch a Brexit deal with the EU, or parliament votes down her deal, then Britain would face leaving without a divorce deal, and thus without a transition period.

Many business chiefs and investors fear such a “no-deal” Brexit would weaken the West, panic financial markets and block the arteries of trade. (Writing by Guy Faulconbridge and Alastair Macdonald Editing by Peter Graff)

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