BREXIT: PAINFUL NEGOTIATIONS WITH A MODEST RESULT AHEAD

In a recent high level meeting, PM Johnson notified the EU that the UK will not ask for an extension of the Brexit transition period. In accordance, he opted to forego the end of June deadline. This decision does not come as a surprise.

  • Focal Point

Highlights:

  • The UK deliberately missed the end-June deadline to seek an extension of the Brexit transition period. Thus, by the end of this year at least a rudimentary agreement will be necessary or trade will fall back to WTO rules.
  • Both sides agreed to intensify stuck talks. The stalemate is due to opposing underlying views: While the UK sees its Brexit dividend in breaking free from EU rules, the EU fears that the UK will undercut its regulations to get a competitive advantage. The implementation of the Northern Ireland backstop could also further complicate talks.
  • We see a (weak) compromise still more likely than not as a hard Brexit shortly after the Corona crisis would be detrimental to both parties, and most so to the UK. However, both sides need to substantially move which is by no means guaranteed.
  • Chief EU negotiator Barnier issued a deadline for a deal by end-October in order to get it ratified by year-end. PM Johnson is pushing for much progress to be done in July, but we see the “hot” phase to truly start after the summer break in August, creating additional uncertainty for markets.

Download the full publication below

BREXIT: PAINFUL NEGOTIATIONS WITH A MODEST RESULT AHEAD
Download
PDF
MORE INSIGHTS

RELATED INSIGHTS

READ NOW
FIRST Q2 EARNINGS RESULTS SHOW POSITIVE SURPRISES. EXPECT LIMITED NEGATIVE REVISIONS
Growth (yoy) is clearly negative but the magnitude should deteriorate further (to be in line with expectations) as more firms will report in the next few weeks: the next two weeks will see the bulk of reported results.
READ NOW
NO ECB SUMMER SURPRISE THIS YEAR, GOVERNING COUNCIL WANTS AGREEMENT ON RECOVERY FUND
After having augmented the volume of the Pandemic Emergency Purchase Programme (PEPP) in June, the Governing Council did neither act nor announced outright action at today’s meeting.
READ NOW
CHINA’S GDP SURPRISED ON THE UPSIDE BUT DEMAND STAYED RATHER WEAK
China’s GDP rose by 3.2% yoy in Q2, after a Covid-19 related drop by 6.8% in Q1, according to data published by China’s statistical office this morning.
MORE INSIGHTS