2 minute read
With both the UK and Europe upping the ante on negotiations, Chief UK Economist Ross Walker gives his latest take on potential Brexit trade outcomes.
Post-Brexit trade deal negotiations have made little progress since July, with both sides now upping the ante – most notably the UK’s threat to renege on parts of the Withdrawal Treaty.
Despite Prime Minister Johnson’s latest deadline announcements, we still think trade deal negotiations will not be concluded before mid-December 2020. It is difficult to disentangle genuine issues from negotiation posturing but the principal stumbling block remains the ‘level playing field’ and dispute-resolution. Whilst some sector-specific issues, such as fishing waters access, are likely to remain problematic, agreement could presumably be reached in most areas once some mutually acceptable accord on the fundamentals had been reached.
In our view, while the probability of a ‘No deal’ has increased slightly in recent days we believe a rudimentary trade deal (such as that outlined below) is more likely. There still appears to be sufficient mutual interest in securing a bare-bones free-trade agreement, thereby avoiding the inconveniences of a WTO* platform. And certainly, it is also a very feasible outcome as the drafting and ratification of a simple trade agreement would not take long.
However, the heightened uncertainty as we approach deadlines in coming weeks will lead to increased market volatility.
Key events to watch in coming weeks
|Date||Event & comments|
|8 September 2020||Next formal round of EU-UK negotiations resume|
|9 September 2020||UK government to publish Internal Market Bill|
|15-16 October 2020||EU Council summit – a key point for any policy developments or concessions|
|31 October 2020||Non-binding ‘deadline’ signalled by EU for agreed trade treaty text|
|23-26 November 2020||European Parliament (EP) plenary session is a possible opportunity for EP ratification of a deal|
|10-11 December 2020||EU Council summit – final opportunity to conclude a deal?|
|14-17 December 2020||European Parliament plenary session – final opportunity for EP ratification of deal|
|31 December 2020||Formal end of transition period. WTO trading arrangements in absence of a deal or extension of status quo|