(Bloomberg) -- Labour leader Jeremy Corbyn walked out of talks with the government aimed at finding a Brexit compromise, all but killing off any chance U.K. Prime Minister Theresa May had of getting her plan through Parliament.
Corbyn left the door slightly open to doing a deal with the government -- but only if May makes "significant changes," he said in a statement. The pound fell to the lowest in four months.
An end to the cross-party talks and the prime minister’s imminent departure blow wide open the possibilities for what Brexit will eventually look like. It’s now almost certain that it will be May’s successor who completes the U.K.’s departure from the European Union and the next months will see Conservatives choose a leader in a ballot that could define the terms of the divorce.
May had appealed to Labour for help in early April in a last-ditch effort to get her unpopular Brexit accord approved in Parliament, after her own party voted to defeat it for a third time. But six weeks of difficult negotiations yielded little and Labour was increasingly concerned that a future Conservative leader wouldn’t stand by any promises May made.
Corbyn finally pulled the plug on the talks on Friday, a day after May gave in to Tory demands to promise a timeline for her own departure from office. Some of the candidates to replace her, such as former foreign secretary Boris Johnson, are anti-EU hardliners who fiercely oppose Labour’s demands for closer ties with the bloc.
“The position of the government has become ever more unstable and its authority eroded,” Corbyn said in a letter to May on Friday. That undermined confidence in the “government’s ability to deliver any compromise agreement.”
Undeterred, May still plans to put her main piece of Brexit legislation that would enshrine her deal in law to a vote in Parliament next month.
But before that, the next step could be to put a series of non-binding votes to Parliament to try to find what kind of Brexit the House of Commons could support. May said on Friday the government was considering whether to proceed but an official close to the process said they were working on a system that would ensure lawmakers can’t just reject all the options, as they have in the past.
"We’ll also consider whether we have some votes to see if the ideas that have come through command a majority in the House of Commons," May said. "But when MPs come to vote on the Bill they will be faced with a stark choice."
Corbyn said the government would now want to "test the will of Parliament" and the party would consider any option to try to break the deadlock. May’s team blame the failure to reach an agreement on talks on Labour’s division and indecision over whether they want to deliver the divorce or hold out for a second referendum.
The pound fell to $1.2743, clocking up a 2% decline this week and heading for its worst five-day run since Feb. 2018. Investors are wary of the prospect of prolonged political turmoil and the risk that a hardliner who favors a no-deal Brexit could end up in charge.
May is also under pressure from polls suggesting her Conservatives will suffer a humiliation in next week’s European Parliament elections. Nigel Farage’s new Brexit Party is enjoying a surge in support from voters who are frustrated at the governments failure to complete the divorce.
On Friday, May urged the public to stick with her party and reject Farage. “Every few years he pops up, he shouts from the sidelines, he doesn’t work constructively in the national interest,” she said. “Next Thursday I want people to vote Conservative, because it’s only the Conservatives who can deliver Brexit.”
--With assistance from Alex Morales, Jessica Shankleman and Thomas Penny.
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