UK's May faces calls to soften Brexit as political limbo drags on

[June 14, 2017]  By William James and Kylie MacLellan

LONDON (Reuters) - British Prime Minister Theresa May's Conservative party resumed talks on a deal to prop up her minority government on Wednesday as she faced a battle over her Brexit strategy just days before EU divorce talks are due to begin.

As Britain entered a sixth day of political turmoil, May's team continued talks with Northern Ireland's Democratic Unionist Party (DUP) to secure their support in parliament after May failed to win a majority in Thursday's election.

But a deadly fire at a tower block in London could delay the announcement of any deal, BBC political reporter Norman Smith said. He also said Brexit talks could possibly be delayed.

May's botched election gamble has left her so weakened that her Brexit strategy is the subject of public debate inside her party, with two former prime ministers calling on her to soften her EU exit approach.

Following more than an hour of talks between May and DUP leader Arlene Foster on Tuesday, May said the discussion had been productive and Foster said she hoped a deal could be done "sooner rather than later".

Despite the uncertainty over her ability to govern, May had confirmed that Brexit negotiations - expected to be the most complex international talks Britain has held for decades - would begin as planned next week.

"There is a unity of purpose among people in the United Kingdom," May said following a meeting with French President Emmanuel Macron in Paris.

"It's a unity of purpose, having voted to leave the EU, that their government gets on with that and makes a success of it."

But pressure was mounting for May to change course on the type of Brexit Britain should pursue.

The Times newspaper said finance minister Philip Hammond would push May not to leave the customs union - an arrangement which guarantees tariff-free trade within the bloc but prohibits members from striking third-party trade deals.

The report cited unnamed sources, and the finance ministry declined to comment.

Nevertheless, it illustrated the challenge May will face in the remaining days before the EU divorce talks begin: finding a position that satisfies both pro-European and eurosceptic factions of her party if she wants to remain in power.

European politicians also appeared to detect a shift in the mood around Brexit, with France's Macron saying the door was open until the negotiations had concluded for Britain to remain a member of the EU. Once done, however, Brexit would be difficult to reverse.

DUP TALKS

May has given no indication she will change course on the key elements of Brexit; but whatever her plan she will be heavily reliant upon the 10 lawmakers from the eurosceptic DUP, who would help her edge past the 326 votes needed in parliament to avoid the government collapsing.

However, a deal with the DUP also risks destabilizing Northern Ireland by increasing the influence of pro-British unionists. They have struggled for years with nationalists, who want the British province to join a united Ireland.

Former Prime Minister John Major said he was concerned May's plan to govern with the support of the DUP could pitch the province back into turmoil by persuading 'hard men' on both sides of the divide to return to violence.

Britain's Prime Minister Theresa May, leaves 10 Downing Street in central London, Britain June 13, 2017. REUTERS/Stefan Wermuth

Irish nationalist party Sinn Fein said the prospect of a British agreement with the DUP was causing anxiety and fear.

While the DUP are deeply eurosceptic, they have balked at some of the practical implications of a so-called hard Brexit -- including a potential loss of an open border with the Republic of Ireland -- and talks will touch on efforts to minimize the potential damage to Northern Ireland.

PARTY DIVIDED ON EUROPE

Brexit minister David Davis has insisted the approach to the EU divorce has not changed, but May has recognized that a broader consensus needs to be built for Brexit and has made clear she would listen to all wings of the party on the issue.

She will have to manage conflicting demands from within her own party, including a proposal for business groups and lawmakers from all parties to agree a national position.

"We would restore faith in politics if we could show that this parliament can at least function in presenting a view in the national interest which would command a majority on a cross party basis," said pro-European Conservative lawmaker Ken Clarke.

Former Prime Minister David Cameron said May needed to listen to rival political parties, and that there would be pressure for a softer Brexit that would give greater priority to a close trading deal with the EU.

Divisions over Europe helped sink the premierships of Margaret Thatcher, Major and Cameron, and many of her lawmakers and party membership support a sharp break with the EU.

The performance of the British economy could also influence perceptions of Brexit. Data on Wednesday showed average weekly pay in the three months to April fell by 0.4 percent on the year in inflation-adjusted terms - the biggest fall since the three months to September 2014.

As European leaders tried to fathom exactly how Britain would begin the negotiations, German Finance Minister Wolfgang Schaeuble said Germany wanted a Brexit deal that would limit negative consequences for the bloc but also did not want it to weaken Britain.

The veteran conservative predicted that Britain would regret its departure from the bloc at some point in the future.

(Additional reporting by Alistair Smout and Elisabeth O'Leary; Editing by Guy Faulconbridge and Ralph Boulton)

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