Brexit update: 2 mins on the latest

09 September 2020

Ross WalkerChief UK Economist

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2 minute read

With both the UK and Europe upping the ante on negotiations, Chief UK Economist Ross Walker gives his latest take on potential Brexit trade outcomes.

Post-Brexit trade deal negotiations have made little progress since July, with both sides now upping the ante – most notably the UK’s threat to renege on parts of the Withdrawal Treaty.

Despite Prime Minister Johnson’s latest deadline announcements, we still think trade deal negotiations will not be concluded before mid-December 2020. It is difficult to disentangle genuine issues from negotiation posturing but the principal stumbling block remains the ‘level playing field’ and dispute-resolution. Whilst some sector-specific issues, such as fishing waters access, are likely to remain problematic, agreement could presumably be reached in most areas once some mutually acceptable accord on the fundamentals had been reached.    

In our view, while the probability of a ‘No deal’ has increased slightly in recent days we believe a rudimentary trade deal (such as that outlined below) is more likely. There still appears to be sufficient mutual interest in securing a bare-bones free-trade agreement, thereby avoiding the inconveniences of a WTO* platform. And certainly, it is also a very feasible outcome as the drafting and ratification of a simple trade agreement would not take long.

However, the heightened uncertainty as we approach deadlines in coming weeks will lead to increased market volatility.

Key events to watch in coming weeks

Date Event & comments
8 September 2020 Next formal round of EU-UK negotiations resume
9 September 2020 UK government to publish Internal Market Bill
15-16 October 2020 EU Council summit – a key point for any policy developments or concessions
31 October 2020 Non-binding ‘deadline’ signalled by EU for agreed trade treaty text
23-26 November 2020 European Parliament (EP) plenary session is a possible opportunity for EP ratification of a deal
10-11 December 2020 EU Council summit – final opportunity to conclude a deal?
14-17 December 2020 European Parliament plenary session – final opportunity for EP ratification of deal
31 December 2020 Formal end of transition period.  WTO trading arrangements in absence of a deal or extension of status quo
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