In World Economy News 30/11/2016
The European Commission’s Brexit negotiator suggested at a briefing with the region’s governments that they only have a small window of time to seal a Brexit deal once talks begin.
Michel Barnier held a meeting Tuesday in Brussels about the upcoming negotiations and discussed a possible timeline. The need for the European Parliament to approve divorce terms means that any deal must be concluded by the second half of 2018 if U.K. Prime Minister Theresa May triggers two years of talks by the end of March, according to a government official present. A spokesperson for the Commission declined to comment.
Such an approach would put both sides under pressure to find common ground in a short period of time. Billed as a seminar, the gathering of three experts from each member state other than the U.K. indicate Barnier and European Union governments are working to form a united front. Also discussed were how Britain’s exit would affect the EU’s budget, according to another government official familiar with the matter.
As the Brussels meeting was underway, European officials elsewhere stuck to the line that there can be no engagement with the U.K. about the outlines of Brexit until May has invoked Article 50 of the Lisbon Treaty. European Commission spokesman Margaritis Schinas told reporters in Brussels “it’s no notification — no negotiation; and no speculation.” Italian Foreign Minister Paolo Gentiloni agreed.
Are we Clear?
“I made this clear in my talks” with May, German Chancellor Angela Merkel said in Berlin. “First there is Article 50, then there will be common guidelines by the European Council, and then there will be negotiations.”
That lack of flexibility is a disappointment to banks and businesses pressuring May to secure a transitional arrangement that preserves current trading terms between the U.K. and EU until a new relationship is agreed. Rupert Harrison, chief macro strategist at BlackRock Inc., said on Monday that May would need to ask for such a deal before triggering Article 50.
Standing alongside Merkel, Maltese Prime Minister Joseph Muscat said he had “seldom witnessed” this much convergence among European governments.
There are few signs anyone in Europe is willing to give the U.K. a break. European Union President Donald Tusk declined a request by some U.K. lawmakers for the rights of Europe’s citizens to be confirmed before official talks. People shouldn’t be “bargaining chips,” he said.
Click here for a refresher on what makes a Hard Brexit harder than a soft one.
Dutch Finance Minister Jeroen Dijsselbloem warned London may lose its status as the euro-area’s financial capital if the U.K. refuses to fully apply EU regulations after Brexit .He predicted a “tough ride” for every EU government, but especially the U.K.
“We can’t allow the financial service center for Europe and the euro-zone to be outside Europe and to go its own way in terms of rules and regulations,” Dijsselbloem said in the European Parliament. “We have to take a firm stand on this. There’s no alternative.”
For all the obstacles standing in Britain’s way, U.K. Trade Secretary Liam Fox continued his charm offensive in a trip to Frankfurt. Back in London, the government denied a handwritten memo photographed being carried to the May’s residence that revealed parts of its Brexit strategy. Among the apparent insights in the document was the intention to “have cake and eat it” and that some were “loath to do” a transitional plan.
Source: Bloomberg
