Brexit negotiations fly in a cloudy sky

8 years ago - Published in Finance, Fundamental Analysis

Britain and the EU on Thursday, September 28, hailed the progress of "constructive" Brexit divorce negotiations following a major speech by Prime Minister Theresa May, but Brussels warned that trade talks may still be months away.

Speaking after the 4th round of talks in Brussels, European Union negotiator Michel Barnier and his British counterpart David Davis agreed that May's speech in Florence had created a "new dynamic" for the discussions.

But France's Barnier said more progress was needed on divorce arrangements before they could move on – as Britain wants to do now – to discussing a future relationship including a possible trade deal.

"We have had a constructive week, yes, but we are not there yet," Barnier told a news conference with Davis.

"It will take several weeks or months until we can say there is sufficient progress on the principles of an orderly withdrawal."

If they fail to agree then, the next chance will not be until a summit in December, with the clock ticking to reach a final deal before Britain formally leaves the European Union on March 29, 2019.

Davis struck a more optimistic tone than Barnier, saying that May's speech had paved the way to unblock stalled talks, particularly on the Brexit bill which the EU reportedly estimates at 60 to 100 billion euros ($70.7 to 118 billion).

"Thanks to the constructive and determined manner in which both sides have conducted these negotiations I believe we are making decisive steps forward," Davis said. "This was a vital week."

May's Florence speech offered concessions, including a pledge to honor Britain's financial commitments for at least the two years after it leaves the EU in March 2019.

She also proposed a transition period of around two years after Brexit Day to allow citizens and businesses to adjust to the new situation.

But with the next round of talks starting on October 9, Davis and Barnier have clashed in particular over whether the European Court of Justice should keep primacy over British law for European nationals after Brexit.

Barnier also insisted there could be "no possible link" between Britain's divorce bill and future relations – dismissing Davis's warning earlier this week that the financial settlement depended on progress on a trade deal.

European Council President Donald Tusk, who represents the EU member states, said after meeting May in London on Tuesday that there was "no sufficient progress" so far.

The British premier is set to meet her EU counterparts at a summit in Tallinn, Estonia, later Thursday, which will focus on French President Emmanuel Macron's vision for the future of the bloc.