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Bob Mason
Europe, Brexit or Britain economy or financial concept, Closed u

Just a few months ago, British Prime Minister Boris Johnson vowed to talk away if a Brexit blueprint had not been in place by the end of June.

We are now in mid-August and to be completely frank, it just looks as though the Brits have made no progress since the drop-dead date.

So, the real question is why do the British PM and chief negotiator David Frost continue to hold talks?

There has to be one simple answer to this…

If “Little, once “Great” Britain continues to stand up against “The Establishment” it may give other EU member states a voice.

We have heard very little from the most likely member states to leave the EU. Well, the ones that were on the cusp of calling their very own referendums not too long ago.

As a reminder, these included Austria, Greece, Portugal, and Spain. Even the French were teetering. Had it not been for the French voting system Marine Le Pen would have definitely left a few of The Establishment red-faced.

Negotiating with the Establishment Democratic Style

Putting the political chaos of yesteryear aside, you only have to revisit the discussions on the COVID-19 Recovery Fund to get an idea of just how broken the EU actually is.

Member states such as Italy and Spain, who suffered the most from the pandemic, were on their knees.

The Frugal Four showed little interest in the needs of the most crippled economies that have a far greater contribution to the EU coffers.

Austria, Denmark, the Netherlands, and Sweden make up the Four.

By GDP, Italy ranked amongst the top 10 economies in the world, with Spain in the top 15.

From the Frugal Four, only the Netherlands managed to make it into the top 20 before the COVID-19 pandemic.

Surely, the economic powerhouses of the EU should have a greater voice than the minnows…

A voting system based on contributions to the EU coffers would make far more sense than 1 member one vote.

If the EU is to survive the COVID-19 pandemic and come out stronger, there will be no thanks given to the likes of the Netherlands.

I’m assuming that there are plenty of Austrian, Danish, Dutch, and Swedish citizens enjoying working throughout the EU.

I’m also guessing that each of the four nations would struggle with unemployment if all of their citizens returned home.

So, it really doesn’t come as a surprise that Britain voted to leave. It also didn’t come as a surprise that Brexiteer Johnson swept his way through the General Election.

As we move through August, the bigger question amidst the COVID-19 pandemic is whether there is any point in further talks.

If Britain walks away, the EU will claim victory. Well, until individual member states look to negotiate trade terms direction with Britain.

Can they even do that under the EU structure? Probably not.

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If Britain makes some headway into bilateral trade agreements with the likes of the U.S, LatAm, Japan, China, and Australasia it may not matter.

A prosperous Britain answerable to no one but its own electorate would be quite an enticing alternative for the likes of Italy

We’re some way off elections across the “most at risk” EU member states. It gives Britain and the EU the time to get Brexit signed, sealed, and delivered.

For the Pound and the Brits, national identity and a return of national pride will undoubtedly be welcomed by most.

The EU will have to make it look like a loss for Britain. It would be a hard sell. Especially if the UK’s economic recovery gathers pace in the coming months.

As for Brexit negotiations, the new deadline for all agreements to be in place is the end of September.

When considering the lack of progress since June, it is hard to imagine that the complex issue surrounding UK fisheries can be resolved in less than 8-weeks.

Imagine the calamity in the UK, if the government yields to the demands of the EU on access to UK waters. That touches on the very reason for leaving the EU… Sovereignty!

I was somewhat amused to read of one of the main reasons behind the EU wanting access to UK fisheries.

Migration of fish from EU waters to UK waters due to global warming. The fish like the warmer waters of the UK.

Britain voted to leave the EU back in the summer of 2016. With the UK summers now reaching the dizzying heights of 37C, who needs sunny Spain.

At the time of writing, the Pound was up by 0.36% to $1.30793 for the day. While also up year-on-year, the Pound is still in the red year-to-date. At the end of last year, the Pound had stood at $1.3257.

GBP/USD 13/08/20 Daily Chart

If the recent performance of the Pound is anything to go by, there is more resilience in the Pound. Much of this, however, is based on the hope of an eventual agreement between the EU and the UK.

An end to negotiations without a trade agreement will be a test but it is unlikely to be the end.

We’re also unlikely to see parity against the Dollar. That is assuming that Britain can come up with a few trade agreements between now and December.

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