UK Threatens To "Walk Away" From Brexit Talks If No Deal By End Of Next Week

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by Tyler Durden
Wednesday, Oct 07, 2020 - 11:07 AM

Prime Minister Boris Johnson has pressed ahead with his Intermarket Bill, calling Brussels' bluff about its threats to sue London over what many have described as a unilateral violation of an international treaty.

As Brussels  presses ahead with a drawn-out and tedious legal action - which will ultimately come to nothing since a decision might not arrive until after the transition period ends Dec. 31 - allowed per the resolution mechanisms hashed out in the withdrawal agreement, Johnon is once again drawing a line in the sand, upping the pressure by declaring Oct. 15 - ie a week from Thursday - as the UK's deadline for a deal. Otherwise, it will walk away.

"We do need to be in a position where we’re able to provide certainty to businesses as to what the terms of our future trading relationship with EU are going to be, and we do believe that we need to be able to give clarity on whether or not there’s going to be a deal by the 15th of October," the spokesman said.

The EU insists that it won't be pressured into concessions, and that they're also preparing for 'no deal' and are prepared to call BoJo's bluff. Bloomberg reported, citing an anonymous official from No. 10, that BoJo was "serious" about walking away...but anonymous comments like this should probably be taken with a grain of salt.

Meanwhile, Michael Gove, a top official in Johnson's government, told Parliament that HMG is stepping up preparations for a no-deal scenario when its transition deal with the European Union expires. While the government would prefer a deal with Brussels, it refuses to be "held hostage".

"No one would be happier than me if we could conclude an agreement, but we have an absolute obligation to ensure that the country is ready in the event that we don’t,” Gove told a parliamentary committee.

Gove added that no-deal planning was being undertaken to ensure "that this country is not held hostage in a negotiation process."

Meanwhile, In the Republic of Ireland, the only EU member to share a land border with part of the UK, Foreign Minister Simon Coveney warned on Wednesday that it would be difficult to envision a compromise that would satisfy both Ireland and the EU's other Atlantic member states, along with Britain.

"This is a big obstacle and I don’t think the British government should underestimate the strength of feeling on fishing of many of the Atlantic member states," he said.

Though as we've learned in the past, the mood of Brexit talks can change on a time. Boris Johnson said last week that he was "pretty optimistic" that deal would be struck. However, the last round of formal talks ended without a deal last week. And while both sides insist that they're committed to finding common grand, many fraught areas of disagreement remain, including the fisheries issue mentioned above. Aside from fisheries, the other main issue for the UK is rules on state subsidies. For more on this, Politico has published a comprehensive guide to what might happen if 'no deal' becomes a reality.

British trade minister Liz Truss offered an apt summary of the UK's negotiating position during an interview Wednesday on BBC radio, where Tess insisted that a deal with the European Union is "do-able", so long as the bloc remembers where the UK is coming from. "A deal is absolutely do-able. We know the type of deal we want, it's the deal that Canada has with the EU," Truss said.

The pound weakened against the dollar Wednesday suggesting that markets are taking Johnson's threat seriously. To be sure, if we've learned anything from the last three years, it's that both sides need to run out the clock, since both the EU27 and BoJo have a political interest in convincing their electorates that they managed to win hard-fought concessions from the other.