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Why Theresa May rejected draft Brexit deal

The 'backstop to the backstop' would effectively separate Northern Ireland from the rest of the UK. Credit: PA

Brexit negotiations failed to reach an agreement at the weekend because the EU is seeking a "backstop to the backstop", according to a Government source.

Such an outcome would keep Northern Ireland in the customs union and single market but the rest of the UK would not be, introducing a border between the two, something Theresa May would have to reject.

This may seem surreal, but the EU is not persuaded that the UK's backstop plan - which puts the UK three-quarters inside the customs union, unable to set tariffs but able to negotiate trade deals - will actually work, leading to calls for Northern Ireland to be included in the "backstop to the backstop".

Brexit Secretary Dominic Raab was dispatched to Brussels on Sunday to reject this.

Brexit Secretary Dominic Raab was sent to Brussels on Sunday to reject the EU's proposal. Credit: PA

That said, in other respects, a source on the UK's side says there has been good progress on the Withdrawal Agreement and a political declaration on the future relationship between the UK and EU.

Even so, and as I have been saying for days, there is still a gulf between the UK and the EU on how to provide confidence that the backstop itself (not the backstop to the backstop) is temporary.

For what it's worth, the UK thinks the EU has an incentive to show that the backstop would be temporary, because the fact that the UK would be only three-quarters inside a customs union, ie. able to negotiate trade deals (though not trade deals where the UK could negotiate tariffs, only non-tariff barriers - and also not those relating to goods) makes the backstop an uncomfortable precedent for the EU.

Prime Minister Theresa May is unlikely to agree to the 'backstop to the backstop' as it would create a border between Northern Ireland and the rest of the UK. Credit: PA

Most Brexiters will see the Prime Minister as disingenuous in arguing that the EU would not want to keep us in a backstop, so all is still very messy.

Even so, the UK Government thinks it is possible there will be significant progress towards a deal at this week's EU council, and May is nowhere near writing off Brexit talks and is a long way from planning for a no-deal Brexit as the most likely outcome.

What I think this impasse shows, perhaps more than anything else, is how little trust there is between the UK and EU in these talks - first, because the EU thinks there needs to be a "backstop to the backstop", showing it has little confidence in our ability to implement the actual backstop, and second because the UK fears that the EU isn't negotiating a backstop in good faith, and is simply trying to leapfrog us to the "backstop to the backstop".

When I said this was "surreal" I think I was understating the madness.