Brexit trade negotiations are entering yet another crunch week of talks, with the UK once again insisting it will not give any ground on key issue such as sovereignty and fishing rights.
Lord David Frost, the UK’s chief negotiator, travelled to Belgium on Sunday to resume talks with his EU counterpart Michel Barnier.
Intense trade talks between the UK and EU have been ongoing since late October. On Sunday, Lord Frost said there had been “progress in a positive direction in recent days.” He said draft treaties were largely agreed.
However, Lord Frost reaffirmed that the UK would not back down on key issues that have been sticking points in talks thus far, such as sovereignty and fishing rights. He said talks may yet fail.
“We are working to get a deal, but the only one that’s possible is one that is compatible with our sovereignty and takes back control of our laws, our trade, and our waters,” he tweeted.
Health secretary Matt Hancock echoed this message on Monday.
“Our red lines haven’t changed and we’re preparing for whatever the outcome is,” he told Sky News. “Of course, our preference is to get a deal and that is open to the Europeans if they choose to make the progress that’s needed.”
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Stephen Innes, chief global market strategist at Axi, said the pound was in “sharp focus” ahead of the latest round of negotiations.
Innes said the pound was being supported by increased expectations in the market that the UK could reach a compromise in talks. It comes after the exit of two key Brexiteers from government last week.
Lee Cain, the Prime Minister’s chief of communications, and Dominic Cummings, a senior advisor to Boris Johnson, both left Downing Street last week amid a reported power struggle. Both had worked on the Vote Leave campaign.
“With a number of the original Brexit advisors on the Leave campaign having now been sidelined, we’ll see if that makes a difference to the direction of talks,” said Jim Reid, a senior strategist at Deutsche Bank.
Reid said there was so far “no obvious signs of any softening in the UK stance.”
This week marks yet another crunch point in Brexit talks. Analyst at Societe Generale said negotiations were entering the “end game”.
16 November had been widely seen as a key deadline for talks when negotiations resumed in late October. EU leaders had been due to meet in Berlin, which would have given them time to review and discuss any deal. However, that meeting was cancelled due to COVID-19. Leaders will instead hold a teleconference on Thursday, which is seen as the new unofficial deadline in talks.
“We believe Thursday’s European Council meeting may prove decisive for the future relationship between the EU and the UK,” Klaus Baader, the head of Societe Generale’s global economics team, wrote in a note sent to clients on Sunday. “Either there is a deal (or it is in the making) or EU leaders start actively preparing for no deal.”
“Time is running out,” Reid wrote in a morning note sent to clients on Monday. “Any agreement document is expected to be several hundred legal pages long and needs to be translated into around 23 languages and then get ratified around Europe. So [it’s] a logistical challenge.”
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