EU Wants to Keep U.K. Ties as Close as Possible: Brexit Update

(Bloomberg) -- Brexit Secretary Dominic Raab told Parliament he’s heading back to Brussels for talks on Friday, and that he’s confident a deal is “within our sights” -- even though the deadline for a deal could slip beyond October. Meanwhile, the pound rallied after the EU’s chief Brexit negotiator, Michel Barnier, said the bloc wants to keep ties to the U.K. as close as possible.

Some Perspective on Barnier’s Comments (3:48 p.m.)

Despite the positive reaction, Barnier’s comments don’t mean he’s saying a deal is imminent. And it’s also nothing he hasn’t said before.

The “offer” is still conditional on the U.K. accepting the EU’s red lines, in particular on customs, and on the bloc’s insistence that Britain can’t choose the bits of the single market it likes. He also said the topic of how to maintain an invisible Irish border remains the most difficult area of negotiation.

Besides, the free-trade arrangement that the EU is offering falls far short of the U.K.’s ambitions.

Barnier: EU Ready to Offer Unprecedented Partnership (3:27 p.m.)

Michel Barnier, the EU’s chief Brexit negotiator, says the bloc is ready to offer the U.K. an unprecedented relationship which aims to keep ties as close as possible -- the kind of agreement the EU has not had with “any third country.”

The pound rallied to a three-week high on Barnier’s remarks. The currency had tumbled in recent weeks as senior ministers stepped up warnings that Britain was at risk of crashing out of the bloc without a deal.

Future relations are to be based on a free-trade deal and special agreements in areas including aerospace and security, Barnier says after a meeting with German Foreign Minister Heiko Maas in Berlin.

Raab: Tokyo, New York to Benefit If EU Hurts London (3:23 p.m.)

Raab predicts the U.K. and EU will ultimately reach a “sensible” deal on financial services because the City of London is so intertwined with European economies. The U.K. wants to build on EU equivalence for financial services, which is currently “quite a patchwork,” he says.

To ensure market access for financial services companies between the EU and U.K. isn’t disrupted after Brexit, Raab says the two sides are working on developing a mechanism that allows for “sensitive” dispute resolution that doesn’t have political consequences. “What we don’t want to do is get to the situation where it has a more tectonic impact on the broader relationship, given how broad and far reaching it will be,” he says.

Raab: Irish Border Requires ‘Innovative’ Solutions (2:41 p.m.)

Raab said resolving the thorniest issue of the talks -- how to avoid a “hard” Irish border -- will require “innovative” answers.

He hinted that the U.K. could be willing to compromise on giving some role to EU institutions, such as the European Court of Justice, in reaching an agreement on the Irish border. When asked about the court, Raab said he didn’t want to add extra red lines that would make getting a deal more difficult.

Raab Says Deadline for Deal May Slip Past October (2:26 p.m.)

Raab admits that the deadline for agreeing a divorce deal with the EU may slip. Asked to confirm when a deal will be done, he says the government is still “aiming” for October, though “there is some measure of leeway.”

Bloomberg reported today that officials on both sides say an agreement by October is unlikely, and are now aiming for a mid-November deadline.

The longer timeframe is an indication that negotiators are struggling to make headway, and the risk is that the closer talks run to the U.K.’s exit on March 29, the greater the chance that there won’t be a deal.

Lidington: Pragmatism Vital to Avoid No-Deal Brexit (2:20 p.m.)

Over in France, Theresa May’s deputy, David Lidington, has just given a speech urging the EU to show some flexibility. “Without compromise, pragmatism and appreciation of the wider context, there is a risk that we do not strike a deal before March 2019 and we end up leaving without a deal,” he said in a speech at the Paris Business School.

He pointed out that the U.K. had moved its position so far that two Cabinet minister resigned. And he said “there are those in the U.K.” who want a much more distant relationship. Or, more bluntly, the EU can work with May’s offer, or it can have ‘No Deal’ with Boris Johnson instead.

Raab to Meet Barnier for Talks on Friday (2:08 p.m.)

The Brexit Secretary told members of the committee that he’ll be heading back to Brussels at the end of the week to meet EU chief negotiator Michel Barnier. The minister has said he wants to step up the pace of negotiations amid growing concern that talks could break down without a deal. According to a report in the Guardian on Wednesday, Raab is frustrated that Barnier hasn’t made himself more available to negotiate face-to-face.

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