EU Officially Authorizes Phase 2 of Brexit Negotiations

by | 15 Dec, 2017

EU leaders including Juncker (left) say ‘sufficient progress’ has been made… for now

EU leaders have congratulated the UK Prime Minister for pushing Brexit negotiations forward, as they gave their blessing for talks to progress to the next stage of the process – trade talks.

Theresa May made a speech last night to a broad range of politicians from across the EU at a dinner in Brussels, where she called for both sides to embrace the way ahead with “creativity and ambition”.

The next stage of the negotiations may now begin, after the European Commission deemed that ‘sufficient progress’ had been made on phase 1 of the talks, namely EU citizens rights, the Brexit ‘divorce bill’ and the issue of the Irish border.

Phase 2 of the negotiations, are likely to be more challenging as they revolve around trading arrangements post Brexit. Unlike in phase 1 where it was in the mutual interest of both the EU and UK to assure rights for citizens and prevent a hard border in Northern Ireland, trade is a far more contentious issue.

The next section is likely to face more scrutiny by politicians in the UK parliament as well as those in Brussels and Strasbourg, who will be looking to limit the amount of benefits that the UK can retain in terms of trade after Brexit. EU-friendly politicians in Westminster will be emboldened, after May suffered a defeat in the House of Commons on Wednesday, where Tory rebels claimed a victory.

British MP’s who voted to remain in the EU have consistently called for the UK to remain in the customs union, while those who voted to leave have pointed out that this would be the same as remaining inside the bloc, thereby denying the voice of those who voted for Brexit in the referendum last year.

Theresa May has already conceeded to paying a large Brexit bill to the tune of over £40bn, the question is whether she will make more concessions in the form of allowing the EU to dictate the terms of a trade deal. As The Independent reported today, the Prime Minister has implicitly accepted EU plans to postpone the main Brexit trade talks until March 2018, amid worries that the British Government does not know what sort of trade deal it wants from the process. She has instead said that the main thrust of focus should be on the transition period to help businesses dealing with uncertainty instead.

Eurosceptic politicians have long argued that one of the benefits of Brexit would be that the UK could set its own trade terms with other countries outside of Europe such as the US and China. Britain could then hypothetically choose to lower or eliminate trade tarrifs for these countries, thus increasing the appeal of the British market. However, if Theresa May makes further concessions, its possible that the EU could delay this aspect of negotiations once again. The EU already said at the beginning of the year that the UK was not allowed to negotiate trade with other nations while it remains a member. Whether it becomes more flexible in its approach is uncertain.

The Pound rebounded late yesterday, but has since fallen significantly against the Euro, headed for the day’s lows on Friday despite the forward momentum of negotiations (see below).

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ALL RIGHTS RESERVED © INVSTR LTD. 2017

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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