Brexit: Barnier mocks Johnson’s ‘third deadline’ on talks – Guardian
- Michel Barnier has mocked Boris Johnson for issuing a “third unilateral deadline” during a meeting with EU ministers, warning that the Brexit talks remain difficult with little prospect yet of the two sides entering a decisive “tunnel” negotiation.
- The UK urgently wants to open a short “tunnel” negotiation during which the two chief negotiators would be given the freedom by Downing Street and the EU member capitals to be creative in solving outstanding problems on the basis that any outcome would be subsequently backed. But after hearing Barnier’s assessment, diplomatic sources said this final phase did not appear to be on the cards “by far”.
- Discussions on the level-playing-field provisions, including state subsidy control, were continuing but the UK was seeking to keep the issue of EU access to British fishing waters “on the table to the last moment to ensure it can command the highest price for it”.
- Barnier told ministers it was important to put the issue of access to British waters in perspective. The UK was asking to in effect stay part of the EU’s energy single market, the economic value of which was “five times” that of fish, he said. There was also a lack of UK engagement on how the terms of the trade and security deal would be policed, Barnier told ministers, according to sources. “This is now holding up further progress”, he had said.
- Roth suggested that the EU was willing to move from its insistence on the status quo in terms of access to British waters for European fishing fleet.
How a Brexit deal, or no deal, will affect markets – FT (The author is chief market strategist for Europe, Middle East and Africa at JPMorgan Asset Management)
- The UK wants to maintain access to the single market but, in a bid to regain “sovereignty”, it does not wish to adhere to EU regulations. In this context it seems impossible to see a deal being reached. But there is still scope for compromise and for a narrow trade deal to be agreed. In key sectors, the UK could choose to align with EU regulations for a set period. There could then be joint oversight committees to oversee the arrangements.
- Deal or no deal, the two scenarios have very different implications for sterling. In the event of a deal, we would expect to see sterling appreciate by about 5 per cent in trade-weighted terms because it would take the risk of an economic shock from a no deal off the table. By contrast, an acrimonious no deal could see sterling fall by 10 per cent.
- It is far harder to say what the different outcomes will mean for the FTSE 100 index. It is often assumed that there is a negative relationship between the currency and the UK benchmark. This seems intuitive given that 77 per cent of FTSE 100 revenues come from abroad. Unfortunately, it is not that simple. The relationship between sterling and the FTSE 100 is far from stable.
- While the majority of the impact would be expected to be felt at home, we would expect any failure in negotiations to have a broader effect on European activity. UK and European revenues constitute about 40 per cent of the total revenues of FTSE 100 companies.
- Confidence is fragile given the Covid-19 crisis. A disruptive souring in discussions between the UK and EU could weigh on global risk sentiment and asset prices.
- If negotiations do not look like they are proceeding to a fruitful conclusion, UK investors should seek alternative options to hedge the value of their portfolio. By contrast, if our base case looks correct and a deal can be agreed — that might actually be the time to buy UK stocks.