Shares of banks, small-cap companies fall in London stock market amid Brexit turmoil

Shares of banks, small-cap companies fall in London stock market amid Brexit turmoil
May to speak on Brexit battles to save Brexit deal, PM job as resignations plunge U.K. government into turmoil
For more than two years, Prime Minister Theresa May has had to navigate the disunion that plagues not just the U.K. over Brexit, but also her party — even her own cabinet.

By the time she was speaking in Parliament to defend the draft deal she agreed with Brussels negotiators on the terms for Britain's exit from the European Union, there were five more resignations from among her ministers, two from her cabinet, including Dominic Raab, the minister responsible for Brexit.

A further threat to her leadership also emerged as a prominent Tory Brexiteer submitted a letter asking for a vote of no-confidence, leading to speculation it could prompt others to do the same.

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Selling any deal to such a fractious crowd was always going to be a challenge for May. But it's hard to imagine how she can recover from the biggest blow so far: losing her second Brexit minister since the position was created.

By seeking to preserve the closest possible ties with the EU, May has upset her partys many advocates of a clean break, and Northern Irelands Democratic Unionist Party (DUP), which props up her minority government.

Dominic Raabs resignation could spell the end for Mays Brexit plan

"I cannot reconcile the terms of the proposed deal with the promises we made to the country in our manifesto at the last election," Raab wrote in a letter Thursday.

But at a press conference later in the day, May said she's not going to back down despite the challenges to her approach.

"I understand fully that there are some who are unhappy with those compromises," May said. "But this deal delivers what people voted for and it is in the national interest."

But in the unusual breakup between Great Britain and the European Union, there was the added challenge of trying to please multiple sides. Now that a draft compromise is on the table, most of those sides in Britain are up in arms.

The ultimate outcome remains uncertain. Scenarios include Mays deal ultimately winning approval; May losing her job; Britain leaving the bloc with no agreement; or even another referendum.

"We're in the Brexs*it," screamed the Sun newspaper. "May's soft Brexit deal blasted by all sides."

Raab, along with Northern Ireland Minister Shailesh Vara, Work and Pensions Minister Esther McVey, Junior Brexit Minister Suella Braverman and Junior Education Minister Anne-Marie Trevelyan, all resigned from May's government Thursday.

He was confident the country would vote to remain, but voters opted by 52-48 per cent to quit the EU, a result that left both the Conservatives and the country more divided than ever. Camerons successor, May, has been struggling ever since to deliver a Brexit that satisfies leavers, reconciles remainers and doesnt rock the economy — a near-impossible balancing act.

"The government is falling apart before our eyes as for a second time, the Brexit secretary has refused to back the prime minister's Brexit plan," said Jon Trickett, a member of opposition Labour Party leader Jeremy Corbyn's senior team.

Thursdays political mayhem prompted a big fall in the value of the pound, which was trading 1.5 per cent lower at $1.2797 as investors fretted that Britain could crash out of the EU in March without a deal. That could see tariffs on British exports, border checks and restrictions on travellers and workers — a potentially toxic combination for businesses.

"Theresa May has no authority left and is clearly incapable of delivering a Brexit deal that commands even the support of her cabinet — let alone Parliament and the people of our country."

"The choice is clear," May told lawmakers during a bruising three-hour question and answer session. "We can choose to leave with no deal. We can risk no Brexit at all. Or we can choose to unite and support the best deal that can be negotiated — this deal."

At this late stage in a negotiation process that's lasted more than two years, May had hoped an ultimatum would save her and the draft she painstakingly reached with the EU: it's either this deal, or chaos.

Less than a day after May won her Cabinets grudging backing for the deal, two Cabinet ministers and a handful of junior government members resigned, and a leading pro-Brexit lawmaker from Mays Conservative Party called for a no-confidence vote in the prime minister.

Both Wednesday and Thursday, May outlined the choices available: a deal "which brings back control of our money, laws and borders, ends free movement, protects jobs, security and our union; or leave with no deal, or no Brexit at all."

Surviving the grilling in Parliament on Thursday is just one part of a still fraught road to getting her way. But even that doesn't guarantee success.

But the DUP has rejected the deal, saying its provisions to avoid a hard border between Northern Ireland and EU member Ireland would impose new barriers between Northern Ireland and the rest of the U.K., weakening the bonds that hold the United Kingdom together.

In her opening statement, May paid tribute to Raab and other ministers for the work they had done on the deal. "Delivering Brexit involves difficult choices for all of us," she said.

"I do not pretend that this has been a comfortable process — or that either we or the EU are entirely happy with all of the arrangements that have been included within it."

The lack of enthusiasm for the deal from Brexiteer ministers means few will be willing to get out there and sell it to the public. Its not hard to see why they would be reluctant to wax lyrical about it on the Andrew Marr sofa. If agreed, the UK pays billions to the EU in a divorce bill – something Boris Johnson once suggested Brussels could go whistle over. Free trade deals look off the menu for the foreseeable as a result of a UK-wide customs union in the backstop agreement – which the UK could leave only if an independent arbitration panel consisting of five people agreed. As for taking back control, there is a continued role for the European court of justice, at least in the short to medium term.

The deal as it stands sets out the terms of the divorce, which is set to happen on March 29: the $67-billion bill, and the protection of the rights of each other's citizens once the breakup happens. It would end free movement that is possible under the current relationship.

The most controversial are provisions that would temporarily keep the United Kingdom aligned with EU rules as long as necessary to avoid border checks between Northern Ireland and the Republic of Ireland. The deal also allows for the extension of the transition period as the two sides work out a new trading arrangement. The transition period is currently set for 21 months.

This would be uncomfortable for No 10 as it would reveal how the Conservative government is having to rely on Labour votes to get its plan through. Even now, the idea that this deal will pass seems pie in the sky – but the chief whip, Julian Smith, has said it is possible. To make it happen, the suspicion is that the government will need many Labour MPs to make up for losing the support of the DUP and swaths of angry Tories. Increasingly, I cant see how they would get it through without a significant number of Labour MPs getting behind it, remarked one Tory MP.

"Voting against a deal would take us all back to Square 1," she said. "It would mean more uncertainty, more division, and a failure to deliver on the decision of the British people that we should leave the EU."

Dominic Raabs resignation this morning as Brexit secretary is a near-fatal blow to Mays Brexit plan – and to her premiership. Prior to the meeting, No 10 aides privately conceded that, of all the ministers that could resign, it was Raab that they could not afford to lose. Raab helped May keep the show on the road in the aftermath of the Chequers backlash, in which the key Brexiteers David Davis and Boris Johnson quit. A pragmatic Brexiteer, Raab was a crucial hire for No 10, as the choice showed that Mays plan still had appeal to leave voters.

Full-blown criticism came from all sides of a packed house. Some of the most devastating came from her own side. In a question, Brexiteer Jacob Rees Mogg threatened to pen a letter adding his voice to the call for a no-confidence vote.

Later he did submit it, according to the British Press Association, saying that May's deal "has turned out to be worse than anticipated and fails to meet the promises given to the nation by the prime minister."

Read more Were the magic number of 48 to be reached, more than half of all Conservative MPs would need to say they no longer have confidence in the PM. That is not a given, but there is new thinking among Brexiteers that it could still be worth it, as the fact they could call the vote would be a display of strength. If they can show there are 48 Tory MPs who have no faith in May, it sends a message that there are 48 Tory MPs who will not vote for her deal.

Labour Leader Jeremy Corbyn said his party "will not accept a false choice between this bad deal and no deal."

There is no doubt that the PM is one of the toughest politicians in British politics today, and deserves some credit for trying to achieve the impossible and hammer out an agreement that would satisfy everyone. However, as is clear from the exasperated tone of ministerial resignations that flowed on Thursday,…

In an ominous sign for May, Nigel Dodds, an MP from the Northern Ireland Democratic Unionist party (DUP), which is propping up May's government, called on MPs to vote against the deal that amounts to a "vassal state."

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Such arguments were heard on all sides of the House, strongly indicating Britain could be heading toward yet another political correction, one that the prime minister and her government may not survive.

With both the Labour Party and the DUP unhappy with the deal, an eventual vote in the Commons — if it even comes to that — could bring the entire thing down, taking May's premiership with it.

"British compromises were inevitable," Nick Timothy wrote. "But the proposal presented to cabinet is a capitulation … not only to Brussels, but to the fears of the British negotiators themselves."

With just weeks left before the Brexit date, May still managed to get the 585-page compromise past her divided cabinet on Wednesday, clearing just one of several hurdles before it can be approved.

Even so, the threat remained that more of her cabinet members will walk in protest, jeopardizing her government. Then the resignations started, first with Vara, who argued the deal puts the U.K. in a "halfway house with no time limit on when we will finally be a sovereign nation."

In between the two came the blow about Raab. In his letter to May, he said he was unhappy with provisions that singled out Northern Ireland, because they present a "very real threat to the integrity of the United Kingdom." He also wrote that leaving the U.K. in line with EU rules, even temporarily, allows the EU to hold "a veto over our ability to exit."

The most immediate threat to May and her plan remains in her own Conservative Party, where the foaming discontent quickly turned Wednesday into open rebellion.

Even before the angry airing in the Commons on Thursday, unhappy Tory MPs took to the airwaves and social media with expressions of disappointment and rancour — accusing May of failing to deliver the Brexit voters had envisioned.

Brexiteers challenged her Wednesday in the Commons, in letters and in the mounting likelihood of a no-confidence vote.

"I do feel that we are getting … at the point where there's going to be a confidence vote on the prime minister given the controversy around the Brexit proposals," said Tory MP Andrew Bridgen.

Downing Street appears to be hoping that the looming uncertainty from a leadership contest or a general election this far down the Brexit road might persuade just enough MPs on all sides to accept the deal and move on.

Meanwhile, a date has been set for an EU summit to consider the deal: Nov. 25. The U.K. House of Commons would then have to ratify it.

As the great unravelling continues, this is a union far more disunited over Brexit than the one it seeks to leave.

Nahlah Ayed is a CBC News correspondent based in London. A veteran of foreign reportage, she's covered major world events and spent nearly a decade working in and covering conflicts across the Middle East. Earlier, Ayed was a parliamentary reporter for The Canadian Press.

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