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‘No deal’ looms over long eight weeks for PM

The headlines on Saturday will be about the cash, the financ..

The headlines on Saturday will be about the cash, the financial settlement and the exit bill.

And they will be about the fact that the PM did not confirm or deny the idea that in phone calls with other EU leaders she has indicated that the UK accepts political and moral liabilities upon EU exit significantly above the £20bn indicated so far.

After warm words, a promise of internal preparation but no actual "significant progress" to phase-two trade talks, the PM might have felt she had banked just enough from Chancellor Merkel and Donald Tusk to see her through the next two months back in Westminster.

But after she left, President Macron in a trademark lengthy press conference took up the mantle of EU bad cop.

The numbers the UK has been talking about are "not even halfway there" and "a lot needs to be done" he said.

But this is not the disaster it might sound, and will come as no surprise to Number 10 Downing Street nor Number 9 at the Department for Exiting the European Union (DEXEU).

:: EU 'green-lights' Brexit trade talk preparations

Video:Tusk: Brexit deadlock has 'been exaggerated'

If it is numbers that are the issue, compromise is relatively easy to envisage.

Furthermore there is a myriad of ways of parking and repurposing such funding – from transition payments, to ongoing regional funding to development aid, and payments for pan-European institutions.

A deal can be done. Whether it can be sold to her party and her Cabinet is another matter.

But the far bigger development around Brussels at this summit was that plenty of people have started to seriously ponder "no deal".

DEXEU played down a story that David Davis is to give a Halloween PowerPoint presentation on the state of no deal preparations to the Cabinet.

But Boris Johnson was suggesting this week that Britain could do "very well".

Theresa May
Video:May on Brexit: Still some way to go

The Conservatives have tried to effectively weaponise the issue against Jeremy Corbyn, arguing that his refusal to countenance such an end point means he will accept "any deal" and lead to a failed negotiation.

Conservative Campaign Headquarters circulated a backbench letter to Mr Corbyn on the issue ahead of PMQs.

It was striking how relaxed the Opposition leader was in Brussels batting away these points, constantly referring to no deal Brexit as a "catastrophe" for manufacturing, for jobs from Sunderland to Bridgend.

The Labour Party is perfectly happy to take this side of the no deal argument, and to let the Conservatives paint themselves as the party of no deal, by default.

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Video:Corbyn in Brussels: 'We want to protect jobs'

It is a debate that sees business groups on the same side as Corbyn, Mcdonnell and Starmer. Labour calculates that many Leave voters are not sufficiently leave to buy into the idea of risking no deal.

It is significant that President Macron said Mrs May did not mention a no deal scenario in her dinner speech.

He felt able to describe such Tory backbench talk as "bluff" and say that the "UK would be the first to lose" in such a scenario.

No deal has been called unthinkable by the Home Secretary, but it is difficult to escape the logic that if the Government is preparing for it, then why shouldn't businesses, which faces an early shallower cliff edge early next year in terms of legal contracts valid after Brexit day.

Home Secretary says a no deal scenario on Brexit is unthinkable
Video:Amber Rudd: No deal on Brexit 'unthinkable'

And the PM did not answer my question as to why EU citizens in the UK and across Europe should not be preparing for no deal if the Government itself is preparing.

Warning about no deal has a certain element of incentivising self-fulfilling behaviour, even if it for now does not change any rules.

But at this summit they have started to talk about what some see as a doomsday scenario.

Number 10 and DEXEU are trying to play it down. The Elysee believes it is a giant bluff. People and business are having to start to take it seriously.

Malta's Prime Minister Joseph Muscat arrives for talks in Brussels
Video:Malta PM: May has moved her Brexit position

So if the PM is to compromise on the settlement, why not do it as early as possible so a transition can be agreed before Christmas?

The PM has eight weeks now to get through. She has to get the EU Withdrawal Bill and a Budget through the Commons.

She has to square this compromise with her Cabinet. She has to win over the EU27 to delivering her side of the deal.

It will be a long eight weeks.

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