Brexit Bulletin: Back for More

(Bloomberg) --

What’s Happening? After the ceremonies and the displays of respect, battle is being joined once again.

Boris Johnson won’t talk about Brexit anymore — “It's not banned, it’s just over, it’s happened,” he said on Monday. “It’s gone, it’s receding behind us in history.”

Yet whatever he says, Brexit is the reason the U.K. prime minister now faces an 11-month deadline for shaping a new relationship with the European Union. That process began on Monday, with a pair of speeches that left few in doubt as to the tenor of the talks to come. 

EU chief negotiator Michel Barnier said in Brussels that a “highly ambitious” trade deal is on offer for the U.K. — if Johnson signs up to strict rules to prevent unfair competition. Speaking minutes later in London, Johnson rejected Barnier’s demand and insisted the U.K. will thrive even if negotiations fail. Each side released a document setting out its negotiating positions. 

Brexit Bulletin: Back for More

Johnson spoke loftily of Britain’s free-trade ideals, and insisted the U.K. would maintain high standards in areas such as environmental protection, but refused to allow enforcement through a binding international treaty. Barnier talked of the need for “robust commitments.”

These tensions have long been telegraphed, including in this newsletter. They flow from Johnson’s decision that Brexit should include U.K. departure from the EU’s single market and customs union. They are heightened by the prime minister’s pledge that he will not seek an extension to the 11-month transition period; even now, in early February, that raises the odds on an abrupt rupture in the U.K.-EU trading relationship on Jan. 1 next year. 

The pound noticed: Sterling slipped early on Monday and continued to fall after Johnson and Barnier spoke. It was down more than 1.3% by mid-afternoon in London, heading for its biggest one-day slump in seven weeks

Brexit Bulletin: Back for More

Johnson today framed the choice as a “Canada-style” free-trade agreement with the EU, or one “more like Australia’s.” You can read more about those models here. Canada’s agreement with the bloc took seven years to negotiate and ratify; Australia effectively trades on World Trade Organization terms and is in fact seeking a fuller deal with the EU.

The negotiations have yet to begin in earnest. But these are the tramlines within which the drama will play out.

Beyond Brexit

Brexit in Brief

Brexited-out | Leo Varadkar: Cool-headed Irish leader or a poser who “stands like a god, and behaves like a god”? Bloomberg’s Dara Doyle reports from an Irish election campaign that’s proving a chastening experience for the 41-year-old taoiseach.

Sacrificial City | The City of London fears Johnson will sacrificed Britain’s key services sector in the rush to get a deal. The U.K. and European financial sectors are highly connected but links could be in danger without a so-called “ equivalence” arrangement.

Terms of Trade | It’s hard to overstate how much promised changes in the narrative on trade and the global economy are at the center of the 2020 hopes of both Boris Johnson and Donald Trump —  and how what is happening in China threatens both their plans, Bloomberg’s Shawn Donnan writes for our sister newsletter, Terms of Trade. Sign up to get Terms of Trade in your inbox every weekday.

Nissan | Japanese carmaker Nissan could attempt to seize more market share in the U.K. if tariffs make imported vehicles more expensive after Dec. 31, the Financial Times reported.

Under the Hood | Britain’s departure from the EU can no longer camouflage the country’s deep problems, Helen Lewis writes for the Atlantic.

High-Speed Politics | Spare a thought for politics-watchers in the U.S. Their week will take them from the Iowa caucuses through the impeachment saga to the State of the Union address and back to the election again.

Want to keep up with Brexit?

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

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