[ad_1]
The final development and expected economic effects of Brexit will also be discussed at the Portfolio Budapest Economic Forum conference on October 8. More details:
A strong statement in the legislature building
The internal market bill, which was leaked on Monday and published on Wednesday afternoon, also I would unilaterally overwrite it the british government the EU exit agreement ratified by the British Parliament and the European Parliament in January this year. In light of the new round of trade talks between the EU and the UK this week, this is a very important development that there is a danger that these negotiations will finally conclude. So the leaked plan also turned into a huge uproar. However, this has continued ever since.
Yesterday afternoon Brandon Lewis, the British Minister for Northern Ireland, openly stated in a question at the British legislature building that
yes, we are preparing for a violation of the law, but only in a “very special and limited way” because other countries have not always met their international obligations when their circumstances have changed.
Strong reactions to the statement came from both the ruling Conservative Party and the opposition and capitals of the major EU countries. It was about avoiding breaking the law and the importance of maintaining trust in the trade talks between the EU and the UK that have just started. The British government, meanwhile, remains confident that there will be a deal.
In addition to strong official reactions from Brussels on Wednesday afternoon, three sources informed Reuters that for now norththe EU will stop negotiations, because you don’t want to appear responsible for the chaos the British government is creating with its internal market bill. However, the seemingly reassuring signal does not change the basic problem for the time being, the planned British breach of the exit agreement in January, which in turn finally it can provide a basis for the failure of negotiations, the failure to reach an agreement.
By the way, in protest of the content of the Internal Market Act, the Northern Ireland Protocol, yesterday the British government’s chief lawyer resigned abruptly, Jonathan Jones. And key decision makers in Wales and Scotland have strongly criticized that The bill would severely restrict the decision-making power of their own parliaments and governments., which could intensify popular protest against London’s central government, which ultimately it could jeopardize the unity of the United Kingdom.
What is the essence of the internal market proposal?
The exit agreement, ratified by the British and European Parliaments in January, was based on the premise that after midnight on January 31 the British would leave and a transition period until the end of 2020 (as long as the country remains on the market sole EU), EU-British relations will be replaced by a free trade agreement, which will regulate trade around 800 billion euros a year, as free as possible.
The regulatory framework decided 8 months ago also includes that starting in 2021, part of the UK, Northern Ireland will continue to be part of the Union’s single market, so there will be no border controls at the border between Northern Ireland and Ireland. but in the meantime some rules of the British customs system would also be taken into account, so the treaty contained special but not yet fully developed rules for this area (Northern Ireland protocol). In any case, the agreement already established that
- In merchandise trade between Great Britain and Northern Ireland, the British government must collect customs duties on behalf of the EU, and British companies must complete export declarations for exports to Northern Ireland.
- The UK government is subject to the rules on state aid for businesses in Northern Ireland, it can only grant aid in accordance with EU rules (and the UK government should inform the EU in advance about the rules on aid provided to from 2021 to see: in a really fair competitive environment if Brits are thinking).
As we have written, the recent internal market bill wants to unilaterally annul these and this is also included in the material published on Wednesday afternoon:
it would give British ministers the right to be exempt from the above rules.
For example, British companies could make concessions on exports to Northern Ireland from the January deal. Furthermore, the new law would declare that EU state aid rules would only apply to Northern Ireland, paving the way for many creative solutions in other parts of the country.
The government argues in the new bill that there are internal inconsistencies in the 8-month exit agreement (!) Ratified and that, given the sovereign interests of the UK, the government would only partially comply with the previous framework.
According to Reuters situational awareness in fact, the British government wants to introduce a legal safety net In order to avoid legal difficulties, even if the EU and the British government cannot finally reach a trade agreement, that is, the relations would sink back into the WTO trade rules system from January. As we wrote above, this is not the starting point for the exit agreement, but now the British government wants to prepare for this possibility with the legal safety net. This suggests that the no-deal Brexit is coming to fruition.
Will there be an agreement on this?
In parallel, David Frost, the British government’s main negotiator on Brexit, announced that speed up government preparations for a no-deal deal scenarioMeanwhile, Michel Barnier sat at the table with the EU’s chief Brexit negotiator in London today to continue negotiating. The lower level expert consultations started yesterday and will initially last until Thursday and thereafter In principle, the statements of the two chief negotiators on what has been achieved will appear on Thursday afternoon.
No breakthrough can be expected after such a precedent and therefore what Barnier reports to EU27 leaders during and after the negotiations is crucial. Under one scenario, the UK strategy aims to pretending to be serious about the no-deal Brexit compromise to persuade EU leaders to change Barnier’s negotiating mandate, i.e. to allow the EU to do so in certain areas, otherwise the British will agree to a failure without agreement.
Due to the urgency of time, the parties must agree before the EU summit on October 15 on the terms of trade from January, so that there is still time for both parties to ratify and prepare for the framework. It is conceivable that again, in the last moments, that is, in the first half of October, some kind of agreement is reached, which may even be a truncated agreement that does not cover all the details. Barnier had previously warned of the possibility of this.
Leo Varadkar, the former Irish Prime Minister who signed the agreement between the EU and Britain, the current Deputy Prime Minister, told Reuters today: there is still time to agree and a tax-free free trade agreement with the EU would, in effect, eliminate the sensitive issues that the British government would now seek to address with this controversial bill. Current Irish Prime Minister Micheal Martin also expressed strong concerns about the planned move by the British government, but also said that if there is a will, a solution can be found for everything.
This question of will is very important,
Another consideration behind the British bill is that the Boris Johnson see that it is not possible to reach a good agreement with the EU, thus causing the interruption of the negotiations, and that is why they communicate that the no-deal Brexit is also a good scenario, of which, of course, the EU is to blame.
A no-deal Brexit is coming, according to Fitch
The final result of this draft is not yet known, but Fitch Ratings has changed its forecast today and now expects trade with the EU and the UK as an external third party from January instead of a low free trade agreement. the WTO rules. Between.
In Hungarian:
Fitch expects to leave without a deal
and as a result, it also worsened its UK GDP growth forecast for next year by 2 percentage points. The company, by the way, will go live on 25th September with its new UK credit rating and therefore it would not be a surprise to downgrade the rating to its current ‘AA-‘ rating, for which it has an outlook. negative which is likely to go down anyway.
The pound has weakened significantly against major currencies since Monday due to the growing possibility of an unattended fallout. Today, it was temporarily below 1.29 against the dollar, which made it had been unprecedented for a month and a half, then jumped back to 1.30 on the news that the EU would not stop negotiations. According to Reuters forex market comments, without a deal, the pound could easily fall into the 1.15-1.20 range in the coming weeks.
Cover Image Source: Stefan Rousseau / PA Images via Getty Images
[ad_2]
