Pound sinks as Boris Johnson resurrects spectre of no-deal Brexit
08 September, 2020
The British pound sank on Monday after Prime Minister Boris Johnson seemed to revive investor fears of a no-deal Brexit as London set a six-week deadline for a deal with Europe on trade.
British officials confirmed that new legislation on the country's internal trade regime could undermine key elements of the 2019 withdrawal agreement that allowed Brexit to occur last year.
The announcement triggered a backlash from governments around Europe as accusations of bad faith negotiating were flung at Mr Johnson. The Irish Minister for Foreign Affairs, Simon Coveney it would be “an extremely unwise way to proceed” after it emerged London was prepared to override the Withdrawal Agreement.
Sterling fell on the foreign exchanges with losses of just one 1.0 per cent versus the dollar and 0.8 % against the European single currency.
Mr Johnson has given an October 15 deadline for a post-Brexit trade agreement with europe, brushing off fears about "no-deal" chaos if talks fail.
"If we can not agree by then, i quickly usually do not see that you will see a free-trade agreement between us," Mr Johnson said, insisting it would be a "good outcome" for Britain.
EU leader Ursula von der Leyen warned that Britain is legally bound to respect the Brexit withdrawal agreement, which must form the foundation of bilateral relations in the years ahead.
Others directly accused Mr Johnson of heading back on his word. "There have been signs that the joint political declaration for Boris Johnson had not been worth the paper it was on. Now he’s said it. Boris Johnson is thus turning the negotiations until now and the serious efforts of europe right into a farce," said German MEP, Bernd Lange.
The report cited three persons near to the plans as saying a bill to be placed before parliament this week would undermine agreements associated with Northern Ireland customs and state aid.
"Judging by today's price action in the pound, investors may actually believe that Johnson has indeed resurrected the spectre of a no-deal Brexit," ThinkMarkets analyst Fawad Razaqzada said.
"However, I reckon it is all part of negotiation tactics - and in the end a cliff-edge Brexit is going to be avoided as it isn't in either party's interests."
In response to the report, Downing Street said only that it had been still "spending so much time to resolve outstanding issues with the Northern Ireland Protocol" but was considering "fall-back options".
The eighth round of negotiations resume in London this week, with both sides talking increasingly tough, amid accusations of intransigence and political brinkmanship.
The weak pound meanwhile handed a fillip to the London currency markets as it boosted shares of multinationals earning in dollars.
Source: www.thenational.ae
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