Brexit – Another Deadline Gives Negotiators 7-Days to Wrap Up a Deal

Bob Mason
Published: Nov 12, 2020, 02:36 GMT+00:00

It's the final countdown. EU - UK negotiators have until the 19th November EU Summit to wrap things up.

Great Britain vs EU conflict, international relations, fists on flag background

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Another EU Summit and yet another Brexit deadline. This time around, the EU Summit on 19th November is said to be the deadline for all deadlines.

While Boris Johnson has attempted to force things along, the EU is now also of the view that an end must come at some point. The November Summit is that point in time.

Updates from both sides of the table suggest that talks are likely to continue until the 11th hour.

As has been the case throughout the summer, UK fisheries and the EU’s access to UK waters remains a key stumbling block.

Until now, EU negotiators have put trade talks largely on ice until a compromise is found on UK fisheries.

For the British side of the table, leaving the EU yet yielding to the demands of Macron would leave Britain in the grips of the Establishment.

It isn’t UK fisheries alone, however. Fair competition rules for businesses and a mechanism to resolve future disputes are also sticking points.

Much like Macron’s stance on UK fisheries, the Establishment is attempting to force British firms to operate under Brussels rules.

When considering the stumbling blocks, it seems unsurprising that British negotiators are making little headway.

Time is running out, however, with negotiators no longer having a cushion in case talks fail to progress.

The only other option is for Boris Johnson to take over and negotiate with EU Commission President Ursula von der Leyen. There is one alternative, though one does not even want to imagine how the Brexiteers would react. Boris Johnson could attempt to extend the transition period to allow talks to continue. Even that may not be achievable, however…

Kicking the Brexit can down the road would be a pointless exercise if an agreement isn’t in place by the November Summit.

That Special Relationship

For Boris Johnson, the gamble of allowing talks to extend beyond the U.S Presidential Election has not paid off.

While President Trump files lawsuits and states recount ballots, the writing looks to be on the wall. It would now be a market shock should Trump manage to reverse the outcome of the election.

Joe Biden has already been in dialogue with the British Prime Minister and the Good Friday Agreement was a hot topic of discussion.

The U.S President-Elect

The markets are making a big deal about Joe Biden’s likely support for Europe. In reality, however, the President-Elect is unlikely to throw the U.S-Britain relationship under the bus.

This is assuming that the British government doesn’t jeopardize peace in Northern Ireland as a result of the Internal Market Bill and Brexit.

Whatever happens, Britain is going it alone and will need a favorable trade agreement with the U.S.

According to the updates from the Biden-Johnson talk, a trade agreement will be hinged on respecting the Good Friday Agreement. Ahead of the Presidential Election, Democrats had delivered similar messages in the wake of the Internal Market Bill vote.

With the EU suing the UK over the Internal Market Bill and Biden’s clear message, the Brexiteers will need to tread carefully.

All eyes will be on the House of Commons, following the House of Lords voting down of the Bill.

For Britain, it would be a double blow should a no-deal Brexit also end any hopes of a U.S – UK trade agreement.

The Pound

At the time of writing, the Pound was up by just 0.01% to $1.32201.

Following a 0.38% pullback on Monday, stemming from Dollar demand, the Pound continues to stand its ground.

This is in spite of updates from the EU, where talks are not expected to deliver an agreement this week.

That leaves negotiators just a few days to iron out their differences and present an agreement at the EU Summit.

At some point, the markets will need to consider the worst-case scenario, however unlikely this may be.

Between now and next Thursday, therefore, convincing the Democrats that the Internal Market Bill does not risk jeopardizing peace in Northern Ireland seems key.

If the Democrats are convinced, then there is at least the fighting chance of a U.S – UK trade agreement.

It is somewhat ironic that the Biden administration is placing such emphasis on peace. In the years gone by, that special relationship has drawn British troops into a number of unwanted conflicts. Conflicts that the U.S has been a centerpiece in.

Perhaps we are entering a new era. One where the U.S looks to deliver peace through diplomatic channels. Such a future wouldn’t be a bad one for Britain that has worked hard to maintain that special relationship.

GBP/USD 12/11/20 Daily Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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