Pound Falls as Brexit Negotiations Open

Britain is going for the hardest Brexit possible, a Canada like trade deal or a mere fallback to the Northern Irish backstop, meaning no trade deal at all.

“The question for the rest of 2020 is whether the UK and the EU can agree a deeper trading relationship on the lines of the free trade agreement the EU has with Canada, or whether the relationship will be based simply on the Withdrawal Agreement deal agreed in October 2019, including the Protocol on Ireland / Northern Ireland,” Boris Johnson, the Prime Minister, said.

In a written statement he basically asks for everything, including passporting, while insisting on no “regulatory alignment, any jurisdiction for the CJEU over the UK’s laws, or any supranational control in any area, including the UK’s borders and immigration policy.”

Gibraltar is not part of the negotiations says EU, “the Government will be acting on behalf of the UK Crown Dependencies and Overseas Territories: the whole UK family,” says Boris.

EU wants a level playing field, state aid rules, and a European court to settle disputes in regards to whether the agreement is applied.

UK has said no to all of them. To which EU has said: well then no passporting rights.

So the pound has fallen by about 1.40% with any comprehensive trade deal needing probably a decade to finalize.

They may instead work on a bare bones deal to begin with, but for now they seem to look very far apart, with it unclear whether this will go any further than the backstop.

The backstop as you remember is some special arrangement for Northern Ireland and then nothing for Britain. EU however sells more to UK than UK does to EU, so they’ll probably want at least a bare bones goods agreement, but in their statement they do mention services too.

So it might work out afterall but the British public voted in the December election on the basis of a mere backstop exit and they still gave Boris a landslide while firing the chief remainer.

Meaning the default is to expect no comprehensive agreement, but that would have its own problems too, especially in Gibraltar.

So there’s some months to go before figuring out where exactly the EU-UK relationship is going with the negotiations barely starting.

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