Thursday, September 20, 2018

Business leaders and financial analysts have issued a fresh slew of warnings about the state of Brexit negotiations, after the European Commission’s chief negotiator spoke of a “disturbing deadlock”, sending the pound lower.  

Carolyn Fairbairn, the director general of the Confederation of British Industry, said that the acute lack of progress on a divorce bill was “deeply concerning to many businesses in the UK and the rest of Europe”.

“Both sides must show the leadership and determination to get the talks moving more quickly because jobs and investment across Europe depend upon it,” she said.

She said that the need to reach an agreement and start moving to discussions on the final deal by the end of 2017 was of “paramount importance to firms”.

Ms Fairbairn also said that there must be a clear guarantee of the right to remain for citizens in both the UK and the rest of Europe.

Speaking to journalists at the end of a  fifth round of talks in Brussels, Michel Barnier on Thursday said the lack of progress had become so acute that officials did not even sit down to full discussions about it during this week’s round.

He indicated that both sides of negotiations had also given up on the UK making “sufficient progress” to be able to move to trade talks in time for the European Council summit in October. Mr Barnier suggested that milestone might be reached by December with constructive effort on both sides.

Malcom Barr, an economist at JP Morgan, said that Mr Barnier’s comments were “predictable” but that they also show that Theresa May’s administration now faces a “difficult balancing act”.

“Some in her party are uncomfortable with the concessions that have already been made in the talks, and many are critical of the EU for resisting an early move to trade talks,” he said.

“That will create calls for more preparations for ‘no deal’, and for an assertive approach to the talks including a possible walk-out,” he added.

He also said, however, that the more time passes, the more likely it is that we will see “more evidence of the negative effects from Brexit related uncertainty” as well as “more examples of the negative consequences of ‘no-deal’.”

The pound slipped against several currencies after Mr Barnier’s statement. In the afternoon it was trading just below $1.316.

General secretary of the TUC, Frances O’Grady, commented that “the Prime Minister’s high risk strategy of flirting with a no deal Brexit has failed”.

“Negotiations are still in deadlock, and workers and businesses have been put at greater risk from a Brexit cliff edge,” she said.

“The Prime Minister must act to protect national stability, and to safeguard workers, businesses and the economy. That means staying inside the single market and customs union for the transitional period,” she added.

“And it means keeping single market membership on the table as an option for our future relationship with the EU.”