Banking News

Brexit negotiations progress

Brexit negotiations progress

(7 September 2018 – United Kingdom) Policy makers have suspended the original October deadline for the UK and EU to sign a Withdrawal Agreement which would have stated the terms of the divorce and set out a transition period in which the UK would remain part of the EU's single market and customs union but no longer have any voting rights.

Arriving at mutual agreement by the ambitious timeframe of the end of 2018 would not leave suitable time for scrutiny by the respective parliaments by 29 March 2019, the date by which the ‘Brexit’ split becomes official. Germany and the UK are reportedly willing to leave some aspects of the future trading relationship open to review. Currency markets reacted with the GBP Pound Sterling initially jumping on the news as it suggested that the intense debate over future dealings may be stretched out further.

EU negotiator Michel Barnier has suggested that the EU could improve on its proposal for keeping open the EU-UK border between Ireland and Northern Ireland and has warmed a little to the proposal for the future trading relationship proffered in July by May. He also appears open to linking the $50.4 billion divorce bill to a future trade agreement, a change that would help Prime Minster Theresa May pass the deal successfully with parliament. The Irish border question is the main outstanding issue preventing a withdrawal agreement. The UK can't accept a solution that leaves Northern Ireland cut off, by a different regulatory or customs regime, from the rest of the country and so proposed to include all of the UK in the backstop for a period until a future. The EU rejected this initially however their resolve appears to be softening.

The EU faces populist ‘euroskeptics’ in Italy, Hungary and elsewhere and must show that the cost of exiting is expensive to discourage further dissolving of the EU as a whole. Trade negotiators believe a complex deal could take decades to be completed due to the broad array of technical details and competing politics. The clock is ticking with 200 days remaining to ‘Brexit’ the EU but only two months left to complete a withdrawal deal.

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