Tory rebel remainers warned that they have Theresa May's future in their hands.

An upcoming vote on staying in the customs union after Brexit could be treated as a vote of confidence in her leadership.

Aides to the prime minister have briefed that she is preparing to surrender on the issue.

However, Downing Street insists that she remains committed to cutting customs ties with the EU.

UK government will put a new customs proposal to the EU this week, sources tell BI.



LONDON — Downing Street has reportedly warned rebel Conservative MPs that an upcoming vote on whether Britain should stay in a customs union with the EU after Brexit will be a vote of confidence in Theresa May's leadership.

Next month, MPs will vote on an amendment to the government's Trade bill which seeks to keep Britain in a customs union with the EU. Ten Conservative MPs have already signed it.

The vote will not only have huge ramifications for May's Brexit policy but could pose a threat to her place in Downing Street. That's because the government would treat the vote as a matter of confidence, the BBC reports.

It is not clear what this would mean in practice if the government was to lose. Formal confidence votes cannot take place under the Fixed Term Parliaments Act. However, May could take the decision to resign as prime minister.

A spokesperson for the prime minister distanced her from any suggestions of resignations on Monday, telling Business Insider that it was an "absolute mystery" where the story had come from.

May has repeatedly promised to end all existing UK-EU customs arrangements as part of Britain's departure from the EU.

However, plans to follow through with this commitment were defeated in the House of Lords earlier this week, and the government is also facing a parliamentary defeat on a non-binding debate over the issue this week.

As a result, aides to the prime minister have briefed that she is preparing to surrender on the issue.

However, any surrender would be hugely controversial with Conservative MPs and members of the cabinet.

Hardline Brexiteer Conservative MPs have privately warned the prime minister that any further retreat on Brexit could lead to an attempt to topple her.

"The only thing that will save her now is if she makes clear that there will be no more backsliding," one member of the anti-EU grouping the European Research Group led by Jacob Rees-Mogg told Business Insider earlier this year.

Downing Street aides have also reportedly put bets on which member of the cabinet would be first to resign if May U-turns on the customs union, with Liam Fox and Boris Johnson the current favourites.

A spokesman for May denied on Monday that she had any plans to surrender on the customs union.

"We are absolutely clear that we are leaving the customs union and will be free to strike trade deals around the world," he said.

The issue of whether Britain should remain in a customs union with Brussels goes to the heart of the Brexit divide at the Conservative Party. Opponents say it would stop Britain from being able to sign new free trade deals after Brexit, while supports argue it would protect jobs and go some way to preserving the invisible Irish border.

Up to now, Prime Minister May has sided with the Brexiteers, repeatedly promising that Britain will leave the European Union's customs union and not join any similar arrangement after Brexit.

Brexit Secretary David Davis. REUTERS/Heinz-Peter Bader

Brexiteers have already warned May that keeping Britain in a customs union would lead to a leadership challenge and this week the Cabinet's leading Brexiteers —David Davis, Boris Johnson, and Liam Fox — will urge the prime minister not to ditch her long-standing red line in a meeting of ministers on Wednesday.

The dilemma facing May is how to avoid physical infrastructure on the border between Northern Ireland and the Republic while Britain is outside the customs union and single market.

In her Mansion House speech on Brexit, May outlined two proposals. The first was a "hybrid model" in which Britain would collect EU tariffs on behalf of Brussels. The second, known among civil servants as the "maximum facilitation" option, would seek to minimise but not totally eliminate checks on the Irish border. The EU has rejected all the UK government's suggestions up to now.

A well-placed EU source has told Business Insider that Brussels expects the UK government to submit another proposal this week in a last-ditch attempt to unlock the impasse over the Irish border.

However, the proposal is expected to be rejected amid growing feeling in Brussels that May will soon abandon her customs union red line, the source added.