Brexit Bulletin: Johnson’s Ultimatum

(Bloomberg) -- Today in Brexit:  Boris Johnson said he won’t meet EU leaders for talks unless they shift their Brexit position.

What’s Happening?

New U.K. Prime Minister Boris Johnson is talking tough with the European Union, hardening Britain’s stance on Brexit negotiations. Traders are increasing bets he’ll opt to leave the EU with no agreement, and the pound fell to its lowest in more than two years.

Johnson has indicated he sees no point in meeting EU leaders face-to-face unless they’re willing to revise the deal that's been rejected three times by Parliament.

He wants the bloc to reopen the Withdrawal Agreement it negotiated with his predecessor, Theresa May, and scrap the so-called backstop guarantee – intended to ensure there's no need for checks on goods crossing the land border with Ireland. EU leaders have repeatedly said they’re not willing to do that.

“The prime minister will be happy to sit down with leaders when that position changes,” Johnson’s spokeswoman, Alison Donnelly, said Monday.

Johnson’s stricter approach to the negotiations comes with fewer than 100 days to go before Britain’s Brexit deadline on Oct. 31, and he’s ramping up the U.K.’s readiness to leave with no agreement. More money is being made available for contingency plans, and a public information campaign will launch in the weeks ahead to advise businesses and citizens on how to prepare.

Speaking in Scotland Monday, Johnson still insisted he prefers to leave with a deal, and that it remains the most likely outcome. He is expected to continue speaking on the phone to EU leaders, including Irish Prime Minister Leo Varadkar, in the coming days, his office said.

Continuing his tour of the U.K., Johnson will travel to a farm in Wales on Tuesday to hear the views of agricultural workers on their hopes for life after Brexit. The Farmers’ Union of Wales has predicted the chance of some “civil unrest” among farmers in the event of a no-deal divorce, the BBC reported.

Today’s Must-Reads

• How do you trade Brexit? One guy has spent his whole career finding out, Bloomberg's Anchalee Worrachate and Charlotte Ryan report.
• The pound could face even more pressure when the Bank of England meets this week, Bloomberg’s Anooja Debnath writes.
• Johnson is taking inspiration from Margaret Thatcher as he prepares an advertising blitz to ready Britain for a no-deal exit, Francis Elliott writes in the Times.

Brexit in Brief

Ryanair Warning | Budget airline Ryanair said Brexit concerns are weighing on U.K. demand as it revealed declining first-quarter profits on Monday.

Finance Scrutiny | The U.K. will continue to face scrutiny by EU regulators after Brexit if it wants to access financial services in the region, according to the bloc’s executive arm. 

Gilts Rally? | The three-month rally in U.K. government bonds could extend if the Brexit situation takes a turn for the worse, according to strategists at ING Bank NV. They see benchmark yields sliding to 0.5% – a record – if there’s no agreement.

Manufacturing Malaise | Lost investment, production shutdowns and stockpiling due to Brexit are all weighing on U.K. manufacturers, and there are fears the industry risks its worst downturn since the 1980s, according to a report in the Financial Times.

On the Markets | The pound was trading at $1.2159 early this morning, the lowest since March 2017.

Johnson Booed | The new premier didn’t receive the warmest of welcomes when visiting Scotland’s first minister, Nicola Sturgeon, in Edinburgh on Monday. Johnson was jeered and booed by the crowd on arrival.

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To contact the editor responsible for this story: Anne Pollak at apollak@bloomberg.net, Leila Taha

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