Theresa May, a humiliated figure in a cramped and sweaty Salzburg press briefing room on Thursday, deployed the grandeur of Downing Street’s state dining room as she tried to salvage her Brexit strategy and restore her tattered authority.
Against the wood-panelled backdrop favoured by British prime ministers in times of national crisis, Mrs May warned on Friday there was now a real prospect of a chaotic Brexit, but said: “No-one wants a good deal more than me.”
The pound ticked down as she spoke to the television cameras, amid fears in financial markets that Mrs May’s self-declared “impasse” in the negotiations could turn into an irretrievable breakdown.
The face-off between Mrs May and other EU leaders at this week’s summit in Salzburg did not change the fundamental equation: both sides want a deal. Mrs May needs it to safeguard the British economy and her premiership, while the EU wants to keep the exchange of goods and services flowing with its biggest trading partner.
But the summit left Mrs May further weakened, just at the time when she needed political strength to take on her Eurosceptic critics at the Conservative party conference at the end of the month and deliver the compromises required to close a Brexit deal.
After watching Mrs May accuse EU leaders of failing to treat Britain with “respect”, one Europhile Conservative MP said: “If someone has to demand respect then they clearly cannot command it.”
Mrs May now has just a matter of weeks to engineer a Brexit deal — notably by resolving the vexed question of how to avoid a hard border between Northern Ireland and the Irish Republic — while somehow holding together a Tory party that appears on the verge of a nervous collapse.
The initial domestic reaction to her Downing Street address — in which she promised not to betray the 2016 Brexit referendum result or split off Northern Ireland from the rest of the UK — suggested she had bought herself a bit more time.
“The tone is strong and forthright and shows confidence in the UK’s future,” said Jacob Rees-Mogg, the Eurosceptic Conservative MP who leads the pro-Brexit European Research Group.
Iain Duncan Smith, another Eurosceptic and former Tory leader said: “For the first time we’ve had some clarity of what the issues are in play.”
But the Eurosceptics now expect the prime minister to follow the blunt advice of Donald Tusk, European Council president, in Salzburg and accept that her plan for the UK and the EU to have a free-trade area in goods after Brexit is dead.
The Eurosceptics hate Mrs May’s compromise Brexit plan — dubbed the Chequers deal — because it would involve the UK following the EU’s rule book in relation to goods. They will now increase the pressure on her to take Britain out of the EU’s orbit by striking a free-trade agreement with the bloc.
This deal would be similar to an agreement the EU signed with Canada in 2016, and has been suggested by Michel Barnier, the bloc’s chief Brexit negotiator. “This is the most realistic approach,” said Mr Rees-Mogg.
Mr Barnier will next month make this offer explicit in a draft EU paper about a future relationship between the EU and the UK after Brexit.
But Mrs May made plain in her Downing Street address that she intends to continue to resist calls — led by arch-Eurosceptic and former foreign secretary Boris Johnson — for her to “chuck Chequers” in favour of the Canada option.
She said a free-trade agreement as envisaged by Mr Barnier would see customs checks introduced at the border between mainland Britain and the EU, thereby disrupting business supply chains. It would also leave Northern Ireland separated from the rest of the UK by a customs border down the Irish Sea, she added.
Holding the line against a Canada-style free-trade agreement will be a big test of Mrs May’s authority. Cabinet ministers including home secretary Sajid Javid now see the Canada option as a way out of the impasse in the Brexit negotiations, according to Tory officials.
Others ministers will argue that Mrs May should simply walk away from the Brexit talks so as to ensure the UK does not leave the EU with a bad deal. “People still want a deal but are content to go without one,” said Penny Mordaunt, international development secretary.
Mrs May would also face a big parliamentary test if she abandoned her Chequers plan in favour of a Canada-style free-trade agreement.
“Canada doesn’t have a majority in the House of Commons,” said Chuka Umunna, a Europhile Labour MP and campaigner against Brexit. “The ERG claims there is a majority but there isn’t: the Eurosceptics could end up sabotaging Brexit altogether because it’s not acceptable to parliament.”