Europe's leaders face a huge Brexit gamble on extending the UK departure

The 27 European countries are considering whether or not to grant the U.K. a long extension to its European exit, but this could be the bloc's biggest Brexit gamble so far.

The U.K. remains set to leave the European Union on March 29, but given that there is no support for Theresa May's deal with the rest of the EU, it is likely that the Prime Minister will request more time to nail down a compromise back home. In this context, the European heads of state are due to meet Thursday in Brussels to discuss a potential delay to Article 50 — the legal framework by which an EU country can exit the union. It is up to the 27 heads of state to decide, unanimously, whether such delay can be granted.

European Council President Donald Tusk, who chairs the meetings between the heads of state, said last Thursday that he would "appeal to the EU27 to be open to a long extension, if the U.K. finds it necessary to rethink its Brexit strategy."

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Some in Europe believe that a long extension would ultimately lead to a new stance from London.

"Some in the EU are pushing for a long extension, to give the U.K. more time to find a way out of the mess that is its domestic politics right now," Carsten Nickel, managing director at Teneo Intelligence, told CNBC via email.

Alberto Alemanno, a European law professor at HEC University in Paris, also told CNBC that a long extension could mean the U.K. will push for a closer relationship with the EU.

"Given the limited likelihood of an approved Withdrawal Agreement before March 29, the EU envisages a longer extension to reopen the negotiations in a less constrained timeframe and in completely different political scenario in the U.K.," Alemanno said.

"This longer extension will inevitably entail holding European Parliament elections in the U.K., thus favouring an acceleration of the political changes in the U.K. This might moderate the U.K. stance in Brexit and push for a closer relationship between the U.K. and EU," he explained.

Two European diplomats, who did not want to be named due to the sensitivity of the Brexit process, told CNBC that a long extension would likely add pressure on U.K. politicians and would ultimately mean either an approval for the current deal or a soft Brexit (which would keep the U.K. in a similar position to the EU).

"The longer the drama gets, the less stable the U.K. government would be," one of them said.

At the moment, there is no consensus among the 27 countries regarding an extension. Every capital is considering the different consequences ahead of Thursday's summit.

However, a long extension —perceived as being at least one year —would have consequences for the EU and would not necessarily mean that London will reach a consensus over its Brexit plan.

Political analysts at the European Policy Centre a think-tank, believe that in a long extension, the EU would lose its leverage; fuel the argument of those that want to leave the EU; and face stronger political fragmentation in the upcoming European Parliament elections.

European Commission President Jean-Claude Juncker said last week that if the U.K. does not leave before the European Parliament elections, taking place between May 23 and 26, then London will have to take part in the EU elections.

"Letting the UK participate could also lead to a further increase in Eurosceptic MEPs (members of the European Parliament), with adverse consequences for the balance of power in the European Parliament and even more negative repercussions in the U.K. political system," the EPC's research said.

"If Brexit is delayed substantively, Leave supporters would worry about the U.K. not leaving after all, and are likely to see this as a betrayal of democracy. Remainers' hope of reversing Brexit could be rekindled. As a consequence, both sides could effectively turn the European elections into a quasi-referendum on the UK's relationship with the EU. At the same time, those with moderate views on a range of topics, not necessarily focused on Brexit, would find it difficult to vote for either of the big parties. The result would probably be an increase in support for hardline Eurosceptics and for a people's vote, while the big parties would struggle, making finding a resolution to the UK's conundrum even more difficult," the think tank said.

Having further Eurosceptics in the European Parliament could be a problem for mainstream EU politicians. In the upcoming election, anti-establishment parties are expected to end the dominance of mainstream politics at the European Union for the first time in 40 years.

Furthermore, "extending Article 50 would change nothing about the fundamental options available to the U.K.," the EPC said.

This would be the case even for a no-deal scenario. The EU has repeated that until there is an agreement, the possibility that the U.K. will leave without a deal cannot be excluded.

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