Pound slips as UK threatens to undermine Brexit withdrawal deal
By Frank Prenesti
Date: Monday 07 Sep 2020
(Sharecast News) - The UK government is drawing up new laws that would that would override part of last year's EU withdrawal agreement as Downing Street threatened to collapse trade talks.
Prime Minister Boris Johnson, struggling in the polls after a swathe of policy u-turns and poor handling of the coronavirus pandemic, has demanded a deal be reached by October 15. The pound slipped against the euro and dollar on the news.
Johnson's threat to undermine an international treaty would see Britain remove a legal requirement for new Northern Ireland customs inspections which were designed to stop the return of checks at the border with the Irish Republic.
The prime minister was reportedly set to say that unless a deal is struck by the October deadline the UK would be ready to trade on World Trade Organisation terms from January.
"There is no sense in thinking about timelines that go beyond that point," he was expected to say. "If we can't agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on."
The eighth round of talks are due to begin in London on Tuesday. The UK left the EU in January, but is still operating under its rules in a transition period that ends on December 31. Failure to agree a trade deal would see Britain adopt WTO rules by default.
EU chief negotiator Michel Barnier said expressed concerns over the reports, adding that he would demand answers from UK officials.
"Everything that has been signed must be respected," Barnier told France Inter radio. "We demand quite simply, and calmly, and until the end, that the political commitments in the text agreed by Boris Johnson be legally translated into this treaty.
"The important thing for me is what the prime minister says and does, and what the British government itself says and does," he said.
"The UK government has made it clear they would be content to walk away from the table unless it gets a deal that it wants. Come early 2021, UK-EU trading could be done on basic WTO rules, and the prospect of such an outcome is weighing on the pound, said CMC Markets analyst David Madden.
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