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Tensions between the EU and the UK are skyrocketing just three months before the post-Brexit transition deal expires. The pound weakens sharply against the Norwegian krone.
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The EU warned Britain on Thursday that it might be relevant to take legal action after the union believes the country has broken the withdrawal agreement with the union.
This comes after the British House of Commons passed a law earlier this week allowing the British government to decide any question about trade between Northern Ireland and the rest of the UK.
“The British government has not been able to withdraw controversial parts of the bill, despite requests from the EU,” the European Commission wrote in a press release.
On this basis, the EU believes that the UK has breached its obligations in the agreement to act in “good faith”. The European Commission also believes that the British have started a process that will lead to obstacles to the implementation of the agreement if the bill passes.
It can end up in the Court of Justice of the European Communities
The British government has previously stated that the disputed part of the law is just a safety net in case the EU interprets the withdrawal agreement in an “extreme and unreasonable” way, according to NTB.
The step the EU is taking now shows that tensions between the parties are high at the same time that negotiations on a trade deal are at a critical stage, writes Bloomberg.
The news agency emphasizes that several of these letters are sent each month to EU countries, and that there is now an exchange of letters between the countries before the commission can potentially take the case to the Court of Justice of the European Union.
The UK has one month to respond to the letter from the European Commission. After taking note of these, the EU will be able to take further action.
British authorities will respond to the investigation “eventually,” a government spokesman told Sky News.
The pound weakens
The Norwegian krone strengthened strongly against the British pound after the news. A pound now costs 11.90 kroner, which is 14 øre cheaper than before rumors about the letter began to circulate on Thursday.
Mizuho Bank’s head of currency trading, Neil Jones, tells Bloomberg that the pound may fall further in the future.
Against the euro, the pound weakened around 0.8 percent, which means that a pound now costs 1.09346 euros. The weakening is also marked against the US dollar.
