Theresa May is facing her Cabinet after Dublin insisted it would not accept any unilateral UK ability to end a Brexit backstop agreement on the Irish border.
The meeting of senior ministers on Tuesday comes after Justice Secretary David Gauke said a no-deal EU exit would be “very bad” for the UK economy.
Mrs May is understood to be seeking an opt-out to dampen hardline Tory and DUP concerns over plans for the whole of the UK to remain temporarily in a customs union with the EU after Brexit in order to avoid a hard border in Ireland.
The tough talk from Ireland came as shadow chancellor John McDonnell confirmed Labour would not support a temporary customs union with the EU.
Asked if Labour would vote against a customs union option unless it was permanent, Mr McDonnell told BBC2’s Newsnight: “Yeah, I think so, because… we’ll see what she comes back with and we will be straight and honest with people, if it doesn’t protect jobs and the economy we can’t support it.
“All the messages that we get back over this whole period is that our European partners desperately want what we want – a deal that will protect their jobs and their economies in the same way that we want to.
“So, we think there’s a deal to be had if they recognise that the deal is unacceptable to Parliament, I think that opens up a vista of the opportunity of the real negotiations.”
Mr Gauke told a Channel 4 Brexit debate show: “If we leave on no-deal terms there’s no good shying away, it will be very bad for us economically.
“If we can get a good deal, and that means removing all the frictions…. the Chequers-type deal, as I say, if we don’t have friction with trade, then, economically, I don’t think it’s going to make a particular big difference one way or the other.”
Amid reports that Brexit Secretary Dominic Raab and other Cabinet Brexiteers were pushing for the UK to be able to quit any backstop with a few months’ notice, there was brighter news for the PM as it was reported the EU was prepared to offer London a compromise on the Irish issue.
Brussels may put forward an “independent mechanism” by which Britain could end a temporary customs arrangement with the EU, according to The Times.
After days of speculation a deal on the Irish border issue was imminent, Irish Taoiseach Leo Varadkar used a telephone call with Mrs May on Monday to reject her calls for any agreement to include a mechanism to bring an end to the backstop – designed to ensure there is no hard border in Ireland if the UK and EU fail to reach a broader trade deal.
However, Mr Varadkar’s spokesman said the Irish premier indicated he was ready to consider proposals for a review mechanism, though only if it was clear that the arrangement could not be ditched unilaterally by either side.
The backstop issue has become the major obstacle to agreement on the UK’s withdrawal from the European Union, due to take place on March 29, 2019.
Meanwhile, a Survation poll of 20,000 people for Channel 4 estimated Remain would win another in/out referendum by 54%-46%.
Using a “multi-level” modelling technique, the broadcaster said 105 local authority areas that voted Leave in 2016 would now be carried by the Remain side.