Brexit Bulletin: Now for the Hard Part

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Days to Brexit: 11

(Bloomberg) --

What’s Happening? The battle lines are being drawn for what looks set to be a feisty next phase.

If the past three years of Brexit have been difficult and intense, the next 11 months threaten to be even more so. The U.K. and European Union are already at odds before they even start thrashing out the terms of their future relationship.

For Prime Minister Boris Johnson, Brexit is an opportunity for Britain to break free from what he sees as the EU’s restrictive rules. That’s something his Treasury chief, Chancellor of the Exchequer Sajid Javid, reiterated at the weekend

Reaching a compromise will be difficult and, in private, EU officials warn that there will be bad blood. Johnson’s decision to rule out extending the transition period — which keeps Britain locked into the EU’s rules until the end of 2020 — means negotiators will have to prioritize the most important elements of a future trade deal over the coming year. Other agreements could follow later.

Much attention has been focused on whether the two sides can reach a free-trade agreement that allows the flow of goods between the two territories without tariffs or quotas. But that’s only a small part of the story.

What’s next? The EU’s remaining 27 governments are expected to sign off on a negotiating mandate on Feb. 25. Decisions on any transition period extension, as well as agreements on fishing, data protection and financial services, are due by the end of June. And of course the U.K.’s Brexit transition formally ends on Dec. 31. 

If the two sides haven’t agreed a deal by then, the U.K. defaults to trading with the EU on World Trade Organization Terms.

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Brexit in Brief

Paris Match | JPMorgan Chase & Co. is buying the former BNP Paribas offices in central Paris with space to house as many as 450 employees, as banks seek to bolster their footprint in the European Union after Brexit.

Looking Ahead | Johnson hailed the U.K.’s burgeoning trade links with Africa as “the future” in a thinly disguised warning to the European Union. “Africa is the future and the U.K. has a huge and active role to play in that future,” Johnson said as he addressed the U.K.-Africa Investment Summit in London.

Fine and Punishment | The European Union hardened its position after Javid’s comments at the weekend, and are considering the possibility of levying fines or restricting U.K. access to European markets if Britain violates the terms of any future relationship with the bloc, the Financial Times reports. 

On the Markets | The pound declined for a second day on Monday, falling below $1.30 with 11 days to go before Brexit. Technical analysis of sterling’s movements suggest there is a chance of the pound beginning a rebound, though there are several possibilities for when that might begin, Bloomberg’s Srinivasan Sivabalan writes.

Home Sweet Home | Asking prices for U.K. homes increased by the most for any January on record, according to property website Rightmove. Values increased 2.3% on the month to an average £306,810 ($400,000), Rightmove said. In London, asking prices were up 2.1%.

Drink for Britain | Pro-Brexit businessman Tim Martin says he’ll cut the prices of several European drinks at his Wetherspoons pubs on the day the U.K. leaves the EU. Drinks such as Spain’s Estrella, Italy’s Peroni and France’s Grey Goose Vodka will be reduced, alongside tipples from Ireland and Poland, in what Martin brands a “let’s stay friends” promotion.

Want to keep up with Brexit?

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