Brexit Bulletin: It’s Time to Talk – Bloomberg

Brexit Bulletin: It’s Time to Talk – Bloomberg

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Almost a year to the day after Britons voted to leave the European Union, Brexit talks finally begin at 11:00 a.m. in Brussels.

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U.K. Brexit Secretary David Davis and EU chief negotiator Michel Barnier will meet, with the latter enjoying the most leverage. Prime Minister Theresa May is on the back foot. She squandered her parliamentary majority in a mistimed election and faces increased domestic pressures following last week’s London tower block inferno. Terrorism appeared to strike London again overnight, with one person killed outside Finsbury Park Mosque.

“The election result increased the probability of extreme outcomes,” says Phillip Souta, head of U.K. public policy at Clifford Chance. “If there is going to be a deal, it makes it more likely to be softer than before the election, but on the other hand the probability of no deal at all has increased.”

Flags of the European Union fly outside EU’s  Europa building in Brussels.

Photographer: Jasper Juinen/Bloomberg

Davis struck a conciliatory tone in a statement released overnight, emphasizing Britain and the EU’s “shared European values” and promising Brexit will deliver “a deal like no other in history.”

He and Barnier will speak to reporters at the end of the afternoon.

For all you need to know:

What Next for Theresa May?

May is under pressure to show her leadership skills after the election and complaints about her response following last week’s fatal tower fire in London.

It’s barely a fortnight since she warned that Britain risked entering the Brexit negotiations with “a weak and unstable prime minister.” As Bloomberg’s Robert Hutton and Thomas Penny observed, she was right. It turns out it’s her.

U.K. Prime Minister Theresa May

Photographer: Luke MacGregor/Bloomberg

May is hunkering down, however. Parliament will sit for two years instead of the typical one to prepare for Brexit, the government said over the weekend.

Weekend Wrap

  • Chancellor Philip Hammond said he wanted a “jobs first” Brexit, although he said Britain will leave the customs union
  • International Trade Secretary Liam Fox wrote in the Sunday Telegraph “we want Britain to be able to negotiate its own trade agreements.” New Zealander Crawford Falconer will assist him
  • Investor George Soros told the Mail on Sunday Brexit is a “lose-lose proposition”
  • Ousted Brexit minister David Jones said in the Mail that staying in the single market and customs union would be a “betrayal of trust”
  • The Sunday Telegraph reported May faces a “stalking horse” leadership challenge. The Sunday Times said pro-EU Tories are see Home Secretary Amber Rudd as a candidate
  • Goldman Sachs is shifting personnel away from London and will double its headcount in Frankfurt
  • German Foreign Minister Sigmar Gabriel seeks to keep door open for U.K. not to exit EU, Welt am Sonntag said. Guy Verhofstadt of the European Parliament told the same newspaper that Britain would be welcome to return, but will discover it has changed
  • CIPD survy finds 35 percent of companies paying low wages cannot find low or semi-skilled workers locally.

On the Markets

The formal start of Brexit talks may prove more of a catalyst for the pound than an inconclusive general election, a surprise hawkish shift by Bank of England officials and a spate of disappointing economic data.

Despite the raft of surprises to hit sterling this month, the pound is set to record its tightest monthly range versus the euro since 2014. That may change as negotiations begin, according to Bloomberg’s Anooja Debnath.

And Finally…

Arlene Foster, who holds the balance of power at Westminster, wants a “sensible” Brexit.

As Bloomberg’s Dara Doyle and Peter Flanagan report, it’s not clear what the leader of the Democratic Unionist Party meant when she said that. Several charts show the DUP’s conundrum over Brexit as it consider providing support for May’s Conservative Party.

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