UK PM, Boris Johnson called France President Macron today - the PM spoke of the need for “intensive” talks.
This call has made UK news because it was released through No.10 press office.
The release went on to state the common ‘threat’ that the UK is happy to trade in ‘Australian terms’ with the EU in the absence of agreement.
This ‘Australian’ trade model has been mentioned many times by no.10 - problem is that the EU take little notice because EU/Aus trade, due to geography, has no cognizance of JIT (just in time for major manufacturers, food industry and pharma).
Anyways, the significance of the press release is more for UK consumption - didn’t get a mention in EU press - it highlights the UK PM taking a hard line.
Reality is that behind the scenes there is progress - state aid has seen some compromise,
On fishing Barnier has been seeking some movement from EU states arguing that for coastal states a no deal will be worse off for them
On the Ireland question there have been in depth discussions - although the legal action by the EU on proposed breach by UK on that point continues.
Overall I remain optimistic that there will be a deal agreed, likely few leaks in the week ahead but we’ll see.
GBP will react positively on positive news of a free trade deal (FTA) and negatively on negative news. Whether that market judgement proves to be correct or not is irrelevant for traders because - the market is always right
Quick update - I know it’s boring but trading is often boring.
EU meet tomorrow - likely fishing will be highlighted - the EU coastal states refusing to allow Barnier movement - also insisting that fisheries not left to last.
NI difficulty has seen compromise - fishing is bigger headlines so likely some negative connotation thus negative for GBP
This morning - bloomberg reporting that the word ‘intensify’ is to be dropped from the EU communique - this would be significant and possibly seen as a towel throw in.
Very likely a call on the 27 nations to prepare for a no deal - this call is merely for public consumption - most states already prepared, e.g. Ireland’s budget this week is based on a no deal premise.
Gbp rose yesterday - as usual the caveat - ‘they take it up…’
And that was early this morning - now this evening Gbp is back down just as it did 2 weeks ago.
Anyways - fisheries remains a problem - I posted many months ago that fisheries tied to financials is a possible trade being mentioned - the UK have fisheries that the EU want / EU has the financial market that the UK want - seems now is the time to raise that again - let’s see.
Likely a clearer sign from UK tomorrow and over weekend as to no.10’s thinking - will they walk or talk - hard to tell - if I were a betting man I’d bet on the talking.
UK’s Dominic Raab (de facto 2nd in command) has commented on radio this morning that there’s a deal to be done. The PM will make an announcement later - yesterday evening was his unilateral deadline for a deal - so hard to know yet whether he will stick to that.
One aspect not mentioned - energy - UK has access to the EU energy market - very much larger than fish - a deal on energy is almost complete but seems the EU has held back on completion of that deal which would have allowed the UK some access to that market.
Rumours that energy being tied into the talks rather than being separate.
Bottom line - GBP positive if the talks continue, negative if plug is pulled by PM - watch this space.
Oh - meant to mention - that word ‘intensify’ has again raised it’s head this evening.
‘European Commission President Ursula von der Leyen said EU negotiators would still travel to London next week to “intensify” talks despite Mr Johnson’s comments.’
That’s speak for ‘ok we see the need to take the talks forward, into the tunnel as in the recent past, no more leaks or posturing - now it’s time for work’.
I’m still betting on a deal - if i were a betting man
Agreed, there must be some kind of a deal. The PM’s delegation and the EU’s delegation were not sent off to meet endlessly for the purpose of not making a deal. Too much trade depends on it. And both parties want a deal - we want to buy their stuff, they want to buy our stuff. So there will be some kind of fudged compromise deal at the very least and both parties will claim victory.
And the GBP will go up a little bit with the relief that the UK government can no longer screw things up for the markets. And then it will trundle sideways for years and years until we can see the strength of the economy post-Brexit and post-pandemic - maybe about 2024.
Yes Tom - humans have been trading since… - well some argument since when, but likely long before our time.
Your post encapsulates the one thing that many guys lack - forward thinking.
There’s an oldie well known US trader who says that this is a thinking person’s game and he’s right, the more a person thinks the more he/she’ll understand.
Latest is that the talks are over - well sort of over.
The latest spat was surrounding -
The EU dropped the word from the original draft communique and the UK see this as a de-facto snub - the UK have been calling for entry into the tunnel for a couple of months, they accepted the new word as meaning the same thing.
The communique was from the 27 leaders and not from Barnier, he has re-introduced the word in his tweet yesterday - so in it goes.
It does seem that both sides are game playing, the market still expects the talks to continue nonetheless.
Cable has risen 230 pips since yesterday’s post - that’s the value of current affairs.
No.10 has just confirmed that face to face talks to re-start tomorrow.
This from the BBC - note the use of the word “intensify”.
“jointly agreed a set of principles for handling this intensified phase of talks”.
Lord Frost said talks would begin again in London on Thursday.
The full statement from No 10 said it was “clear that significant gaps remain between our positions in the most difficult areas” and it was “entirely possible that negotiations will not succeed”.
But, it added: “We are ready, with the EU, to see if it is possible to bridge them in intensive talks.”
Game playing over - now down to some serious work.
The EU have published the joint organizing principles for the negotiations - I’ll not bother with a link since it’s a long read, a quick summary - there are no surprises.
1. The parties have agreed to intensify negotiations. Talks will take place across all negotiating tables concurrently. Negotiations will take place daily including weekends, unless both sides agree otherwise.
2. This next and final phase of the negotiations will in principle be on the basis of each side’s legal texts…
3. Lead negotiators in each of the workstreams should move as quickly as possible
7. It is understood that, regardless of progress in individual workstreams, nothing is agreed in these negotiations until a final overall agreement is reached.
Energy including all services and goods are now in the mix.
Likely to be less ‘publicity’ except for bland type of statements saying everyone is working hard etc etc so less chance of more game playing - hence Gbp should remain reasonably strong.
Final days looming as time is now short - any agreement needs to be ‘scrubbed’ by the legal eagles, then translated into 23 official languages, then debated and passed by both parliaments.
(the uk house not so difficult as the PM has a huge majority - eu side could pose some problems as they have already stated they wont ratify if the uk still keeps to breaking the agreement signed last year - their stance ‘how can we agree to a new agreement if the last one has been broken within a year’ )
Vast majority of the tech stuff has been done and dusted including such things vat (sales tax), security, access to databases etc.
It’s now down the the 3 wise men - fishing, level playing field and governance (a speedy means to resolve disputes)
Apparently they are still as far apart as ever and the rule - nothing agreed until all agreed is being applied to current draft text.
Barnier will likely brief all 27 ambassadors on this Friday - might be portrayed as the lead up to a breakthrough in the press.
Anyways the saga is now coming to a close - I see Scottish fishers thinking of re-locating to NI so that they can continue to export their 80% catch to EU without tariffs - easy to re-locate a boat I suppose.
Latest position is unchanged - except for the timing aspect.
One of the EU people today has tested positive for covid - likely quite a few, including M. Barnier will self isolate - meantime talks have been suspended.
EU apparently have decided not to pull the plug but to leave it up to the UK to do so, and as time passes the chances of that happening are increasing. Seems the position is that if there is no deal agreed then they’ll leave it at that until next year some time.
Plans are advanced to support nations most affected by no deal in the interim.
Pressure from Nissan to the effect “the business will not be sustainable. That’s what everybody has to understand.” (Nissan Monday past when referring to their car plant in Sunderland, England ) will have little effect on the UK position any more than car makers in Germany will have on the EU.
Bottom line as each day passes by default the chances of no deal increase.
"Frankly, I cannot tell you today if in the end there will be a deal."
Opening statement by EU Comm Pres to EU Parliament this morning.
Being mooted is implementation of the agreed parts - a Trade Agreement Lite so to speak with the hard parts kicked into next year.
This may or may not play - the single market has to be protected at all costs according the the Pres - she further commented - “We want to know what remedies are available if one side deviates in the future. Because trust is good, but law is better,"
This is the breakdown of trust that has permeated these discussions and slowed progress down.
Next move, which the EU has resisted, is for the publishing of their no deal plans including Finance, air travel and so on. Some states are pushing for these to be published put before the E P , when this happens then that is the signal for end of talks although it seems that the EU side will not formally end the discussions - they’ll wait for the UK to do so.
Btw - talk in the market re an urgent meeting called by Barnier with the 8 coastal countries re fisheries tomorrow morning - GBP rose on the talk.
Reality is it is non urgent - meeting via video link is to update those countries on state of play - there is the possibility that Barnier might ‘lean’ on those ministers to give a little - they refused last time he did so (this is just my guess).
So wouldn’t buy GBP on this meeting talk alone - imo of course.
