France Rattles EU Sabre: 'No-Deal' Brexit Now Central Scenario, Demands UK Pay Up

Here we go again.

In what sounds like a repeat of the soundbites from early this year, the French government has once again declared that the UK leaving the EU without a withdrawal agreement is now its 'base case' scenario.

That's according to an unnamed official in President Emmanuel Macron's office, according to Bloomberg. That's because UK Prime Minister Boris Johnson is refusing to accept the withdrawal agreement unless the EU agrees to remove the hated Irish Backstop, which, by law, could leave the UK trapped in the EU customs union, but with no authority to offer input into its rules.

EU officials have accused Johnson and his Brexiteers of secretly wanting to reimpose a border between Norther Ireland and Ireland, something that many suspect would lead to a revival of "troubles-era" violence.

But the EU's accusations sound about as a convincing as the unnamed French officials "threat" that the EU should expect the UK to pay the 39 billion pound ($47 billion) exit bill even if the UK leaves the bloc without a deal.

To wit, Brussels has no obvious way to force the UK government to pay, just like it has no way to force Ireland and the UK to build a land border, as Mish Shedlock recently pointed out.

And he's not the only one who's noticed this, and questioned who, exactly, will pay for and erect the land border and customs checkpoint.

Will Mexico pay for it? Or maybe "Mr Brexit" himself, President Trump?

Sterling slipped to its LoD following reports that Johnson and his European counterparts were not getting along.

Johnson will meet with German Chancellor Angela Merkel in Berlin Wednesday, and will have lunch with Macron in Paris Thursday to discuss Brexit. All of them will then meet with President Donald Trump over the weekend at the Group of Seven summit in Biarritz, France.

As BBG points out, Johnson is, of course, well within his rights to demand that the backstop be removed. And since it's only intended to be "insurance" in case the two sides don't reach a trade agreement during the post-Brexit day interim, scrapping the withdrawal agreement and seemingly precluding any hope of an orderly relationship between the two in the near term seems a little like cutting off one's nose to spite one's face.

Which supports the notion that many Brexiteers have held all along: That the 'backstop' is merely an attempt by the EU to keep the UK as a nominal (if diminished) member in the customs union. The Europeans have likely been bluffing all along, Shedlock claims. The only thing that's unclear is whether Theresa May had caught on and was playing along, or not.