After months of stalled talks, false starts and setbacks, negotiators from Britain and the European Union struck a proposed divorce deal Tuesday to provide for the U.K.’s smooth exit from the bloc.
But the agreement faces major political hurdles starting Wednesday, when British Prime Minister Theresa May will try to win the approval of her divided Cabinet for a deal many ministers view with skepticism.
The British government confirmed that the negotiating teams had reached a draft agreement and the Cabinet would hold a special meeting Wednesday afternoon to consider the proposal. Its support isn’t guaranteed: May is under pressure from pro-Brexit ministers not to make further concessions to the EU on the key issue of the Irish border.
A spokesman for chief EU negotiator Michel Barnier urged caution, saying a deal wasn’t yet finalized and the bloc would “take stock” Wednesday.
Ambassadors from the 27 other EU countries are also due to hold a meeting in Brussels on Wednesday.
Britain wants to seal a deal this fall, so that Parliament has time to vote on it before the U.K. leaves the bloc on March 29. The European Parliament also has to approve any agreement, as do all 28 EU nations.
Officials have said for weeks that agreement on divorce terms and a framework for future U.K.-EU relations was 95% complete, and for several days negotiators have been meeting late into the night in Brussels in a bid to close the remaining gaps.
The main obstacle has long been how to ensure there are no customs posts or other checks along the border between the U.K.’s Northern Ireland and EU member Ireland after Brexit. Britain and the EU agree that there must be barriers that could disrupt businesses and residents on either side of the border and undermine Northern Ireland’s hard-won peace process—but they have differed on how to achieve that.
Irish national broadcaster RTE said the draft agreement involves a common customs arrangement for the U.K. and the EU, to eliminate the need for border checks, with special provisions for Northern Ireland and a review mechanism to oversee its functioning.
A sticking point in talks has been Britain’s insistence that any such customs arrangement must be temporary. The EU says that in order to guarantee an open border, it can’t have a time limit.
The pound rallied on news of a deal, rising 1.5% against the dollar to $1.3038.
But May faces pressure from pro-Brexit Cabinet members and lawmakers not to agree to an arrangement that binds Britain to EU trade rules indefinitely.
Former Foreign Secretary Boris Johnson, a staunch Brexiteer, said the deal was unacceptable and Cabinet ministers should “chuck it out.”
May also faces growing opposition from pro-EU lawmakers, who say her proposed Brexit deal is worse than the status quo and the British public should get a new vote on whether to leave or to stay.
If there is no agreement soon, U.K. businesses will have to start implementing contingency plans for a “no-deal” Brexit—steps that could include cutting jobs, stockpiling goods and relocating production and services outside Britain.
Even with such measures in place, the British government says leaving the EU without a deal could cause major economic disruption, with gridlock at ports and disruption to supplies of foods, goods and medicines.
On Tuesday, the European Commission published a sheaf of notices outlining changes in a host of areas in the event of a no-deal Brexit. They point to major disruption for people and businesses: U.K. truckers’ licenses won’t be valid in the EU, British airlines will no longer enjoy traffic rights, and even British mineral water will cease to be recognized as such by the EU.
The EU said Tuesday it was proposing visa-free travel for U.K. citizens on short trips, even if there is no deal—but only if Britain reciprocates.
Meanwhile, official figures suggest Brexit is already having an impact on the British workforce.
The Office for National Statistics said the number of EU citizens working in the country—2.25 million—was down 132,000 in the three months to September from the year before. That’s the largest annual fall since comparable records began in 1997.
Most of the fall is due to fewer workers from eight eastern European countries that joined the EU in 2004.
Jonathan Portes, professor of economics at King’s College London, said the prospect of Brexit “has clearly made the U.K. a much less attractive place for Europeans to live and work.”