Brexit Bulletin: Closing In?
Brexit Bulletin: Closing In?
(Bloomberg) -- Today in Brexit: A deal could be in sight on financial services, and Raab thinks an accord will come by Nov. 21
Two big signs that the European Union and U.K. are moving closer to a deal: Brexit Secretary Dominic Raab has indicated he thinks an agreement can be reached by the end of the month, and the Times reports that envoys have finalized terms that would give the U.K. finance industry access to EU markets after Brexit.
The Irish border remains a sticking point, but Raab was optimistic on that, too, in a letter to Parliament that emerged yesterday. Still, final concessions that probably need to be made are politically problematic at home. So the report in the Times of a tentative agreement on financial services and data — if confirmed — could make it easier for May to sell some of the more unpleasant bits of the divorce deal to her Cabinet and party.
Under the agreement, the EU would guarantee U.K. companies access to EU markets “as long as British financial regulation remained broadly aligned with that of Europe,” the Times says. That sounds a lot like equivalence, the tool the EU uses to grant access to other countries and which the EU has long offered as a model for the U.K. (Read our explainer on equivalence.) But this bit of the Times report looks like the key concession: Neither side would unilaterally deny market access without independent arbitration and without a notice period “significantly longer” than the 30 days set out under the equivalence rules.
As always, the devil is in the details. Remember that any agreement on the future relationship is not binding: It’s a political statement of intent, separate from the divorce deal, about the future trade deal the two sides want to hash out once the U.K. has left.
Will be it be enough to stop banks moving staff and preparing for the worst? Probably not. The U.K. has long given up on trying to keep the status quo for banks and downgraded its ambitions for the sector again when it set out its negotiating position in the summer. Banks have been well ahead of the pack setting up offices on the continent and have never taken much comfort from the transition period that’s meant to smooth the exit, as it’s not set in stone until the divorce deal is signed.
But the political declaration is important, and the U.K. wants to make it look as binding as possible. So the most significant thing about this new deal is that it could help get the divorce deal over the line.
Today’s Must-Reads
- How is the City coping with Brexit? Edward Robinson takes you inside the banks and trading houses as they scramble to get ready.
- May had an unusually positive meeting with business leaders, Suzi Ring and Alex Morales report.
- It’s Bank of England decision day, and rate-hike plans are hamstrung by Brexit. Here’s a guide.
Brexit in Brief
No Rush | U.K. employers won’t have to change the way they hire EU citizens in the immediate aftermath of a no-deal Brexit, Home Secretary Sajid Javid said. There would need to be “some kind of sensible transition period” before different requirements were imposed on employers to check the arrival dates of new EU employees, he said.
More Moves | Citigroup Inc. plans to move 63 people outside of the U.K. as the lender continues to plan for Brexit. The bank said in an internal memo it proposed relocating 45 employees from its trading unit and 18 from its private bank.
What Dividend | The U.K.’s budget watchdog cast doubt over the chances of a significant Brexit “deal dividend” boosting the economy, undermining the upbeat view presented by the government.
Even the Softies Have Red Lines | Portuguese Foreign Minister Augusto Santos Silva said any Brexit deal is better than the catastrophic scenario of failing to reach an agreement. “Portugal is one of the countries that has firmly backed the idea that every outcome is preferable to not having a deal,” he said. Still, there’s one thing they wouldn’t accept: a deal “that shows that those that leave the EU will have better conditions than those that remain behind.”
Was Davis Making a Pitch? | Former Brexit secretary David Davis fueled speculation about his leadership ambitions on Wednesday, with a wide-ranging speech setting out his political beliefs. He covered welfare provisions, housing supply, and social mobility -- and put all these issues in the context of the Conservative Party’s true values.
On the Markets | Nomura said it now recommends a “cautious” long position in sterling after the recent slide against the euro made it look attractive. Nomura’s strategist (and close Brexit-watcher) Jordan Rochester says there are reasons to be optimistic with the potential for a Brexit deal to be on the table soon, and the chances of no-deal have been “over-hyped.” The pound traded at $1.2880 early this morning.
And Finally | Struggling to decide which side of the Brexit debate you’re on? Want to keep a foot in each camp? Vivienne Westwood has just the thing: Brexit court shoes. One has a Union Jack on the toe, the other is plastered with the golden stars of the European Union. A snip at £355 ($458) a pair, though only the dainty sizes remain in stock.
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