Brexit Bulletin: Not Giving an Inch

(Bloomberg) --

What’s Happening? The European Union wants to be friends with Brexit Britain. On its terms.

The European Union went on the offensive over the U.K.’s obligations in any post-Brexit trade deal. With formal talks due to begin next week, chief Brexit negotiator Michel Barnier issued an ultimatum, saying there will be no trade deal unless the U.K. agrees to the bloc’s demands on fair competition and fishing.

Trade, fisheries and a level playing field must go hand-in-hand, “otherwise there won’t be any agreement at all,” Barnier told reporters in Brussels on Tuesday. “If we want to achieve in the short period demanded by Mr. Johnson, we can’t have backtracking.” This was not a surprise: Ireland and France had both signposted the position in recent days. Here’s the official EU negotiating mandate, adopted on Tuesday.

The aim “is to protect the interest of Europeans,” said French Europe Minister Amelie de Montchalin. On fishing—likely to be an area of intense negotiation—the EU mandate aims “to uphold Union fishing activities” and “avoid economic dislocation for Union fishermen.” The British will want to do exactly the same, just for their own fishermen.

On the tricky subject of level playing field rules, the final document requires that the U.K. “should uphold common high standards, and corresponding high standards over time with Union standards as a reference point.” That sets up a potentially irreconcilable conflict with Britain, where Prime Minister Boris Johnson wants a slimmer agreement, and has warned he would rather walk away without a deal than accept being bound by EU rules.

For its part, the U.K. quickly rejected the EU approach, calling the idea of a level playing field an “EU construct.” Johnson’s cabinet signed off on its negotiating mandate in London today. We’ll find out what it contains on Thursday.

Beyond Brexit

• U.K. fintech startup Revolut, widely used to exchange currencies, is now worth $5.5 billion.
• Richard Branson’s Virgin Galactic has no flights or profits, but investors love it.
• An ally of German Chancellor Angela Merkel emerged as the front-runner to replace her. Meanwhile, the far-left and far-right are squeezing the country’s centrists. 

Brexit in Brief

Clouds Lifting | Most of the Brexit uncertainty that has been overshadowing the U.K. economy has lifted, although it’s too early to say business investment is fully returning, according to Bank of England Chief Economist Andy Haldane.

Uncertainty Fading | Adding to that picture, Derwent London Plc, a developer of commercial buildings, said London office rents are on the up and increased its dividend by 10%. Bloomberg Intelligence senior analyst Sue Munden said the size of the dividend boost “is a key signal that Brexit uncertainty is waning.”

Transatlanticism | U.S. Trade Representative Robert Lighthizer is expected to visit London in the coming days for talks with British officials aimed at putting plans for negotiations on a U.S.-U.K. free-trade agreement back on track.

Not So Fast | The U.K. shouldn’t allow imports of food that fall short of the country’s own standards when it draws up trade agreements, the head of the National Farmers Union said.

Export Pain | Rules and regulations will hit U.K. exports to the EU whether or not a free-trade deal is agreed, United Nations economists have concluded. The impact of tariffs and non-tariff measures could lead to a 14% drop, they say.

Non-Viable | Nissan Europe Chairman Gianluca de Ficchy said the carmaker’s entire European strategy could be under threat if the U.K. and EU fail to reach a free-trade deal: “We would not be viable,” he said. “We just wouldn’t be able to sell our cars.”

On That Subject | Andrew Neil, broadcaster and chairman of the Spectator magazine, told a U.K. manufacturing conference that Downing Street is happy to see the end of complex, cross-border supply chains after Brexit. “Those days are coming to an end,” Bloomberg’s Joe Mayes reported him as saying.

Want to keep up with Brexit?

You can follow us @Brexit on Twitter, and listen to Bloomberg Westminster every weekday.

To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Guy Collins

©2020 Bloomberg L.P.