Pound Slides As Boris Johnson Threatens To Walk Away From The Table In Opening Gambit With EU

With the coronavirus sweeping across Europe and the US preoccupied with the Democratic Primary and all of its attendant drama, we haven't heard much from the UK and it's ongoing struggle to forge an equitable post-Brexit relationship with the EU.

But that changed on Thursday when Boris Johnson released what is, in effect, his strategy blueprint for the trade deal negotiations. In the document, entitled "the Future Relationship with the EU: The UK's Approach to Negotiations", Johnson essentially asked the EU for a Canada-style trade deal. Specifically, Downing Street said it wanted "regulatory freedom" from the EU and would not accept any intrusion by the European Court of Justice in the dispute resolution mechanisms.

Downing Street said it hoped to achieve "the broad outline" of an agreement with the EU by June, which would leave the two sides "on track" to finalize a deal by September.

However, if the two sides don't make a sufficient amount of progress by June, then Johnson's government would "need to decide whether the UK's attention should move away from negotiations and focus solely on continuing domestic preparations to exit the transition period in an orderly fashion."

In other words, if the EU doesn't drop its demands for some degree of regulatory alignment, including an option to impose tariffs if one side renegs on a deal term or terms, as well as a role for the ECJ in the future relationship, Johnson will simply walk away.

Analysts noted that this marks a decidedly hard-line stance from Johnson, whose ability to stick to his guns through controversial decisions like 'proroguing' parliament, has become a hallmark of his leadership. By signaling that he'd be just fine walking away from the table and reverting to WHO rules and sorting out the complications of invoking the 'backstop', the PM is forcing the EU27 to lay its cards on the table.

U.K. says it may start preparing for no-deal departure in January 2021 from EU Customs Union and Single Market provisions if shape of trade deal isn’t clear by June.

The pound tumbled on the announcement, which is unsurprising given the spike in political uncertainty. But considering all the pundits screaming about Johnson driving the economy off a cliff, we think it's important to remind readers that this is likely just Johnson's opening gambit:

Read the document below:

The Future Relationship Wit... by The Guardian on Scribd