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What was agreed at Chequers?
The UK position shifted or clarified in key areas for a potential deal. The Chequers communiqué says the government will try to negotiate a de facto customs union – though with the option to vary tariffs and reimburse any difference to business – and membership of the Single Market for goods, including agricultural goods, but not services.

The UK aims to avoid any customs checks, and is attempting to reassure the EU that it would accept EU rules – “to commit by treaty to ongoing harmonisation with EU rules”. Asking for agricultural products to be included in effect rules out any ambitious future trade deals with e.g. the US, who would insist on access for their agricultural products. The UK would also accept wider EU “level playing field” rules; a “common rulebook” on State aid, and standards on the environment, social and employment rules and consumer protection at least as high as the current EU standards. While Parliament could refuse any of these rules as they evolve, that would have “consequences” for market access. Oversight and enforcement – another key EU concern – would be provided through a new political and judicial mechanism (which hints at the EFTA Court model), but the UK accepts that the ECJ will be the final interpreter of EU law.

Although the UK would formally end free movement of people, the note talks about a “mobility framework” to ensure that EU and UK citizens can continue to travel and apply for jobs and to study – which may in practice be very close to the current position. The government is not seeking to be in the Single Market for services, highlighting its need for regulatory divergence. This is cherry picking between the four freedoms, but the government seems to be hinting at accepting ‘three and a half freedoms’ (with a ‘generous’ offer on labour mobility), together with meeting the EU’s level playing field concerns.

Could this policy be the basis for a deal with the EU?
Possibly. The UK government has shifted and Brussels wants to be positive in its response even if it has serious reservations about some of the detail. The white paper – as David Davis noted in his resignation letter, is in any case the UK’s opening position and further movement will be necessary. None of the detail will be negotiated before Brexit Day, but Theresa May has opened the door to a deal by appearing to accept a Northern Ireland-specific backstop on the basis that it will never need to be used. The EU may now be encouraged to finalise agreement on withdrawal and transition and begin proper negotiations on the future trade relationship.

Will the resignation of David Davis undo the Chequers agreement or make it more difficult to get it through Parliament?
Not immediately. The critical argument that won a majority of the Cabinet behind Mrs May’s position was parliamentary arithmetic. Most accepted that there is no other Brexit policy that could command majority support in the House of Commons. The resignations last night do not alter that arithmetic. However they do suggest that the Prime Minister cannot count on all of her MPs to support a Brexit deal along the lines discussed at Chequers. With a working majority of just 13, that raises the prospect that she will need the support of Labour or other opposition MPs to win a parliamentary vote on a final Brexit deal. That helps to explain why the government is today offering briefings on the White Paper to MPs from other parties. However such cross-party overtures are reportedly arousing backbench Tory anger. As the Brexit process moves forward it is increasing the internal strain on all political parties.

Can Theresa May survive? 
Probably. For the reasons above she continues to have just enough support among Tory MPs who can see no alternative in the current context. However, it is clear that a growing number of those from the ranks of hard Brexiteers may be prepared to trigger a contest. If 48 letters are sent to the Chief Whip then a challenge would be faced. That would be politically damaging but Theresa May could still survive it.  Above all she is helped by Tory fears of Jeremy Corbyn. Most Conservative MPs do not want an early election fought in an atmosphere of panic, which the removal of Mrs May could provoke, as it would threaten their seats. Fear of Labour and an early election continues to be the strongest protection Mrs May has against a leadership challenge. But that is not an absolute safeguard and if the EU were to reject her new Brexit offer out of hand it could fatally undermine her.

Is an early general election more likely? 
Anything that makes the Prime Minister more vulnerable increases the odds of a government collapse and a possible early general election. However, the Fixed Term Parliament Act means that an early election can only be held if a majority in the House of Commons votes for one. That would require a number of Conservative MPs to support the termination of their own government, which for the reasons above seems an unlikely prospect at present.

What are the chances of a ‘no-deal’ outcome to Brexit?
Very unlikely. UK Government policy is now formally for a soft Brexit. Red lines that stood in the way of that are being eroded. Movement on the Northern Ireland backstop promises to enable a transition agreement. Political crisis could still produce a catastrophic outcome to Brexit. But all sides to the negotiation are working to avoid that and the British shift makes it less likely.

Two weeks till recess
A febrile atmosphere in Westminster in excruciating heat can produce strange outcomes. Michael Gove or Sajid Javid may decide that it’s now or never to become Prime Minister. May will need to perform well in the Commons today and in the 1922 committee this evening. She will need the White Paper, published on Thursday, to land well and she will need the EU to respond constructively. Not to mention the importance of navigating her way through wider concerns relating to suspected Russian involvement in the murder of a British citizen on British soil, and the controversial visit later this week of President Trump. Any one of these would be a significant challenge on its own.

Theresa May is unfortunate to face them all over the course of a single week. But she has shown herself to be a resolute Prime Minister in trying circumstances and she may yet emerge through this latest crisis emboldened. But she will be glad when the House rises and politics takes a break.

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