Theresa is still stuck at deadlock with the cabinet

If the Tory press is to be believed, Theresa May is now refusing to be bounced into the early deal the EU has almost ready and waiting for her to sign – apart from the finicky wee detail of the backstop. Sunday night and Monday’s morning’s late negotiating session in Brussels  failed to clinch it. It’s politics not policy now that’s holding it up, meaning the massed ranks of her critics from left and right including the DUP. Even so, having got so far from a position of almost unique weakness has been a stunning exercise of prime ministerial pull.  Another way of putting it is that the divided cabinet is still failing the bite the bullet or fire it at her. After huffing and puffing before the cameras, the sceptics will acquiesce by the end of the week. Or else quit? Probably not, they may calculate.  Blame that on the EU negotiators or the Commons vote on the withdrawal deal. And then the dam may burst. Laura Kuennesberg’s assessment is well-informed:

  Why does Number 10 believe there could suddenly be a better answer to the same set of problems? As one former minister said, “two plus two is not suddenly going to equal five”.

And at the top table there seems to be growing appetite for a change of approach. Three different members of the Cabinet have told the BBC that the PM has to ditch her plan. Carrying on like this, they suggest, is simply banging their collective heads against the same brick wall, because it will never get through Parliament.

Some of them are even suggesting that the prime minister should consider walking away from the talks. One of them told me: “The raw truth is there is a gap between what we can accept and what the EU is offering.

“She needs to change the dynamic and only the prime minister can do that. That might mean walking away, or saying this is our best and final offer.”

Another said: “She needs to say that there won’t be a deal in order for them to move – she needs to play hardball.”

Another senior minister said there is “no political logic” in carrying on with something that has a “cat’s chance in hell” of getting through Parliament, calling for her to “pivot”.

Is it realistic to imagine that she might change tack?

Well, certainly it’s not straightforward after more than two years of deliberations.

Is it likely? Theresa May is not the kind of politician who does much on impulse.

And a senior member of the government told me recently it was crazy to think the prime minister could change tack at this late stage.

William Hague ex- foreign secretary asks in his Telegraph column if cabinet ministers who dislike Chequers should resign if the EU “doesn’t give an inch” It’s a rhetorical question.

No, they most certainly should not. In those circumstances, they should join, whatever their misgivings, in fully preparing the country to leave without a deal. That is a big step, involving more expenditure, hiring more officials, building more infrastructure and drafting urgent new laws. Many would not want to be part of it.

Furthermore, there is a good argument that a satisfactory deal would only ever be reached after the supposedly last moment for it had passed and when both sides had to face up to the consequences of the talks failing – the EU side as well as the British. For Ireland, these consequences would be just as serious in many respects as for the UK. This is therefore a scenario in which it would be in the national interest for the Cabinet to hold its collective nerve. Sticking together would be the only way to improve the deal at the last minute.

But why should the EU including Ireland pay attention to No Deal preparations if they’re  only a negotiating ploy? That surely is  the problem with it.

What about a second referendum? The ball is rolling but as Hague  explains, the scenario for achieving it is highly unattractive  to most Tories.

Crucially, ministers should see the deep flaws in advocating a second referendum. To anyone who is unimpressed by the choice between the prospective deal or a no deal exit, this is an easy thing to call for. But it is perhaps the surest route to national humiliation, division and uncertainty, needing most of next year to bring it about with no assurance at all that it would solve the problem. It is almost impossible to see a Conservative administration holding together to implement such an idea, which means the road to a second referendum leads unerringly through the catastrophe of a Corbyn government. Jo Johnson’s proposed way out of the Remainer’s dilemma is actually the worst of all the options.

Nevertheless, three out of the four former PMs have come out in favour, with Gordon Brown the latest.

Brown said MPs should be prepared to tell the government to renegotiate with Brussels should the Commons be unhappy with a proposed deal, but that at some point the public would demand another say.

“I believe a referendum will happen as people come to the conclusion that since 2016 the situation has changed and at some point they will want to have the final say,” Brown said in a speech at the Institute for Government thinktank.

He called for the setting up of a royal commission to take evidence from leave and remain voters in order to heal the divisions caused by the 2016 Brexit vote.

But this is jumping several guns.

Finally, that friend of Ulster unionism and dry economist Graham Gudgin of Policy Exchange goes back to basics to pour scarce drops of cold water over the whole idea of a customs union. An argument for a second referendum perhaps?  (Only kidding Graham!).

The purely economic arguments in favour of UK customs union membership with the EU are weak:

There is not much evidence that a customs union would be more beneficial for UK-EU trade than a standard free trade agreement (FTA)

Costs of customs processing are also massively exaggerated. Claims by HMRC earlier this year that customs costs could total 1% of UK GDP or 6% of trade values are anything from five to twenty times too high, being based on a mixture of double-counting (now admitted) and dubious claims about the future costs and numbers of customs declarations.

It is not even clear that a ‘new’ UK-EU customs union would entirely remove customs-related costs.

The UK would remain locked into the EU’s highly protectionist agricultural trade system.

Entering a customs union would make meaningful trade deals with other economies impossible.

The EU would be effectively able to ‘sell’ access to UK markets with no reciprocal benefits for the UK.

Britain would have no voice at future WTO discussions about global tariffs. It would simply have to accept whatever the EU agreed.

The ‘temporary’ customs union would be unlikely to be temporary.

A customs union does not solve the Irish border ‘problem’. Customs checks only represent a small element of potential border checks at EU borders today. A bigger issue is generally product conformity and other single market rules. This is another reason why any customs union would require either effective UK single market membership (see above) or border checks between Britain and Northern Ireland and/or Britain and the rest of the EU.

In sum, a customs union arrangement whereby the UK contracted out huge areas of trade and economic policy-making to the EU would be totally unsuitable for an economy like Britain’s.

Customs unions arrangements may work well for small economies that do an overwhelming share of their trade with a large neighbour (Liechtenstein and Switzerland for example). But the UK is the world’s fifth largest economy, with a diverse pattern of foreign trade and with business and consumer interests that will often diverge from those of the EU.