Theresa May could resign if she loses a vote on leaving the customs union after Brexit

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• Tory rebel remainers warned that they have Theresa May's future in their hands.
• An upcoming vote on staying in the customs union after Brexit could be treated as a vote of confidence in her leadership.
• Aides to the prime minister have briefed that she is preparing to surrender on the issue.
• However, Downing Street insists that she remains committed to cutting customs ties with the EU.
• UK government will put a new customs proposal to the EU this week, sources tell BI.

LONDON - Downing Street has warned rebel Conservative MPs that an upcoming vote on whether Britain should stay in a customs union with the EU after Brexit will effectively be a vote of confidence in Theresa May's leadership.

Next month, MPs will vote on an amendment to the government's Trade bill which seeks to keep Britain in a customs union with the EU. Ten Conservative MPs have already signed it.

The vote will not only have huge ramifications for May's Brexit policy but could pose a threat to her place in Downing Street. That's because the government is considering treating the vote as a matter of confidence, the BBC reports.

It is not clear what this would mean in practice if the government was to lose. Formal confidence votes cannot take place under the Fixed Term Parliaments Act. However, May could take the decision to resign as prime minister.

May has repeatedly promised to end all existing UK-EU customs arrangements as part of Britain's departure from the EU. However, plans to follow through with this commitment were defeated in the House of Lords earlier this week, and the government is also facing a parliamentary defeat on a non-binding debate over the issue this week.

As a result, aides to the prime minister have briefed that she is preparing to surrender on the issue.

The issue of whether Britain should remain in a customs union with Brussels goes to the heart of the Brexit divide at the Conservative Party. Opponents say it would stop Britain from being able to sign new free trade deals after Brexit, while supports argue it would protect jobs and go some way to preserving the invisible Irish border.

Up to now, Prime Minister May has sided with the Brexiteers, repeatedly promising that Britain will leave the European Union's customs union and not join any similar arrangement after Brexit.

REUTERS/Heinz-Peter Bader

Brexit Secretary David Davis.

Brexiteers have already warned May that keeping Britain in a customs union would lead to a leadership challenge and this week the Cabinet's leading Brexiteers -David Davis, Boris Johnson, and Liam Fox - will urge the prime minister not to ditch her long-standing red line in a meeting of ministers on Wednesday.

The dilemma facing May is how to avoid physical infrastructure on the border between Northern Ireland and the Republic while Britain is outside the customs union and single market.

The EU has rejected all the UK government's suggestions for how this can be achieved, including technological solutions and a model under which Britain would collect EU tariffs on behalf of Brussels.

A well-placed EU source has told Business Insider that Brussels expects the UK government to submit another proposal this week in a last-ditch attempt to unlock the impasse over the Irish border.

However, the proposal is expected to be rejected amid growing feeling in Brussels that May will soon abandon her customs union red line, the source added.