Theresa May has outmanoeuvred the hard Brexiteers and decided a bad deal actually is better than no deal after Mark Carney's warning

Her biggest problem is not cobbling together a deal with the EU, but persuading the Commons to approve it

We’re told Theresa May is not happy that Mark Carney’s stark warning to the cabinet about the implications of a no-deal Brexit has become public. True, such leaks are not May’s style. But on reflection the prime minister will not lose sleep about the Bank of England’s worst case scenario: a sharp fall in the pound, an increase in inflation and interest rates and a 35 per cent drop in house prices over three years. (Carney did add that the banks would cope, unlike in the crash 10 years ago. So that’s all right then.)

In interviews, May insists she still believes that “no deal is better than a bad deal”. But every tentative step she takes shows that she has turned her mantra upside down. Her biggest problem is not cobbling together a deal with the EU, but persuading the Commons to approve it. She will frame the choice for MPs as: my deal, or no deal. So Carney’s apparent bad news is good news for May. It reinforces her real, unstated message: a bad deal is better than no deal.

Welcome to the looking glass world of Brexit. May is not the only Alice in this wonderland. Hardline Eurosceptics claim they want a Canada-EU-style trade deal, while many would prefer to crash out with no deal, which they rebrand as cuddly-sounding “world trade terms” but which is rightly feared by business.

The hardliners have had a terrible week. Perhaps it will be remembered as the one when they were rumbled. Their most credible leader, Boris Johnson, damaged himself by claiming May had “wrapped a suicide vest” around the British constitution. The Eurosceptics couldn’t agree among themselves on their long-awaited alternative to May’s Chequers blueprint. This was People’s Front of Judea stuff. Their proposal on the Irish border was a damp squib. It was overshadowed by more empty threats to oust May, which never happen because they don’t have the numbers to defeat her in a vote of confidence among Tory MPs.

The hardliners have pronounced Chequers “dead” and were banking on the EU to pull the plug. But it remains on life support. When the 27 EU leaders meet May at an informal summit in Salzburg next week, they will not administer the last rites. They are acutely aware of May’s domestic difficulties, and remarkably well briefed on the Conservative Party conference later this month. They will eventually reject the Chequers proposals on customs and a single market for goods, but will give May some cover to argue it is still alive.

Reports of a breakthrough in the EU negotiations are premature. But some people on both sides of the negotiating table believe a slimline deal might be struck after the Tory conference, in time for a special EU summit on 13 November.

If – and it’s still a big one – a consensus is reached on the Irish border, the UK and EU would strike a withdrawal agreement. The EU would get the UK’s £39bn divorce payment, while the UK would avoid a cliff edge exit next March, through a status quo transition until December 2020.

Where’s the catch? The legally-binding withdrawal agreement would be accompanied by a vague (non-binding) political declaration on the future UK-EU relationship, including the tricky bits in Chequers on which the two sides can’t agree. Brussels is good at producing fudge as well as chocolate. So is May. They did so together last December to get the Brexit talks over their first finishing line. Now the talk among pragmatic Brexiteers such as Michael Gove and May loyalists on the Tory backbenches is about “getting over the line” in March. They would push May out soon afterwards, leaving the task of defining Brexit to a new prime minister – chosen in a Brexit-dominated contest by the 124,000 Tory party members, not the public.

This scenario will win over some Eurosceptics, when coupled with a blunt warning that voting down May’s deal would put Brexit in peril, by opening the door to delaying the UK’s departure or a general election or a second referendum.

So a vague Brexit could happen, even though both sides would deny it was such. May would have to dress up the political declaration as meaningful, and show “linkage” with the withdrawal agreement. As one cabinet minister told me, “The Commons will not approve £39bn for nothing.” But the increasingly scary implications of no deal for the public, business and the economy, will persuade some Eurosceptics to hold their nose and vote for a bad deal.

There might be a collective sigh of relief at turning back from the cliff edge. But the public deserve more than a vague, threadbare Brexit. MPs, even the Eurosceptics, would be right to insist that voters know the detail. They were misled and duped at the 2016 referendum. They have already had one blindfold Brexit; it would be wrong to impose another. It’s the duty of MPs to ensure the public don’t get fooled again.