Theresa May told by the EU to 'take it or leave it' as Brexit talks risk collapse

• Exclusive: Senior EU source tells Business Insider that they will not budge any further in deadlocked Brexit divorce talks.
• Theresa May should "take it or leave it," the source says at the end of a difficult week for the prime minister.
• May is under pressure from Conservative MPs not to make any further concessions to the EU or risk being ousted.
• The prime minister faces a perilous few weeks as support among her parliamentary allies begins to fall away.

BRUSSELS, BELGIUM - The EU is not willing to offer Theresa May any further concessions in order to secure a Brexit divorce deal, a senior EU source involved in the negotiations has told Business Insider.

"We've done all we can on this side. It's basically take it or leave it as far as we are concerned," the source told BI at the European Council's October summit in Brussels.

The comments follow a difficult week for the prime minister in which she suffered a major backlash from Conservative MPs after telling EU leaders she was willing to extend the Brexit transition period by a "matter of months."

May's offer, and the strength of the backlash, caught EU negotiators by surprise.

"It was really interesting," a senior EU source told BI. "The UK hasn't formally requested it and the idea has always been there floating around. We don't really know why the prime minister said what she did."

But while the timing of May's remarks about the transition came as a surprise, the substance did not.

It is a long-standing, widespread belief in Brussels that Britain's departure from the EU would take longer than the 21 months initially agreed between the two sides.

"Brexit is a process, not an event," a senior source in the European Parliament told BI.

"Switzerland has been negotiating with the EU for years on one thing or another. Imagine what it's going to be for the UK. It'll be decades, a permanent negotiation.

Switzerland has been negotiating with the EU for years on one thing or another. Imagine what it's going to be for the UK. It'll be decades, a permanent negotiation.

"And this is the easy bit. This is only the beginning."

The current impasse in Brexit talks hinges on the so-called "backstop" proposals designed to prevent a hard border between Northern Ireland and the Republic after Brexit.

Under May's version of the proposal, the whole of the UK would effectively stay in the customs union temporarily after the 21-month transition period has ended if no alternative arrangements have been secured.

The EU is open to negotiating this sort of arrangement in the future but is adamant that a backstop covering Northern Ireland alone must be included in the Withdrawal Agreement currently being negotiated.

The latter suggestion is toxic for May. Even if unlikely to be used, the mere possibility it could be used is anathema to the Democratic Unionist Party which props up May's government.

"It's clear on this side that the DUP will vote against it whatever happens," an EU Commission source told BI.

It's clear on this side that the DUP will vote against it whatever happens.

The aim of May's UK-wide customs union idea - in addition to suggestions that the transition period could be extended to three years - is to make the Northern Ireland-only backstop less likely to come into use.

However, the prime minister will have a tough time getting the DUP on board with this theory if the EU sticks to its current position. While the EU negotiating team, led by Michel Barnier, is happy to express an aspiration to negotiate a customs arrangement in the Withdrawal Agreement, it does not want to make it a legally binding commitment.

"We can't bind ourselves to negotiating a customs union. That's basically illegal under the terms of Article 50," a senior European Commission source told BI. "What can do is say we will try our best and endeavour to negotiate it."

"We are not going to negotiate a customs union in isolation, " they said, adding that "a customs union is part of a much wider economic framework" to be negotiated once Article 50 is out of the way.

None of this will matter of course if May is unable to persuade a majority of parliamentarians to back whatever she finally agrees with the EU.

Already the prime minister's suggestion that the transition period could be extended caused an almighty stir in Westminster, with Conservative MPs openly calling for her to stand down.

This is the litmus test for taking back control... this is the killer moment.

But an even bigger row looms for pro-Leave Tory MPs on the issue of whether the eventual backstop is time-limited.

This is a big deal for Brexiteers. "This isn't just one more little compromise from the prime minister to get a deal over the line... it is the litmus test for taking back control... this is the killer moment," a Cabinet source told BI last week.

Pro-Brexit Conservative MPs fear that if May's preferred customs union backstop is signed off without a fixed end date, the UK could be trapped within the EU's customs arrangements indefinitely, unable to sign new free trade deals.

Significantly, and to the dismay of Brexiteers, May has pretty much accepted there will be no time-limit. That's what she has reportedly told Ireland. Tellingly she refused to rule it out when questioned about it at her Brussels press conference on Thursday.

For this reason, the next few weeks look incredibly dangerous for May. Cabinet resignations are a strong possibility, and the threat of Tory MPs sending enough letters to challenge her leadership is high. Meanwhile, the DUP is threatening to vote down the Budget this month in an aggressive attempt to force the prime minister to think again.

This is all deeply worrying for politicians on the other side of the English Channel who fear that May could prove simply too weak to get a deal through.

Fears that May could be replaced by a more hardline prime minister, or that the entire negotiations could be derailed by a snap general election disturb EU negotiators, with just months to go until Britain leaves the EU.

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