Source: Forex News
Welcome to day one of 730
Brexit negotiations begin after nearly a whole year of speculation and build up. Today at 11 a.m. BST in Brussels the door to the negotiation table will open. Theresa May’s government already appears to be on the ropes with a failed attempt to strengthen her hand with a disastrous general election result and with further turmoil on the home front with the horrendous Grenfell Tower disaster.
Brexit negotiations: an awfully wrong timing
Britain’s divorce from the European Union (EU) was always going to be an extremely delicate affair, after recent events, however, the timing of Brexit negotiations couldn’t be worse. The remaining 27 EU members clearly seem to have the high ground.
May’s position in her own government is looking very insecure. A deal between the Conservatives and the DUP has yet to be finalized. Hence forming a majority government is not in the immediate future. These facts are signs that she might face pressure to a secure a soft Brexit deal as opposed to her original plan of a hard Brexit which would have meant she would have more control over immigration and law-making.
With a growing domestic crisis gripping the UK, it is David Davis, the UK Brexit Minister who will face up with the European Commission chief negotiator Michel Barnier. Barnier is looking to end Brexit negotiations by October 2018, with the UK officially leaving the European Union by March 2019.
Brexit negotiations on paying up
The UK’s plan was to be in a position where they could secure a trade deal with the EU while discussing their “divorce settlement”. So far, the EU insists the UK should pay up for its exit, which some speculate could be as much as 100 billion euros. With the Tories in a weakened position, Davis may have no choice but to reach an agreement on this before anything else.
Brexit negotiations on border control
Other pressing matters to discuss is what will happen to the existing 3.2 million EU citizens currently living in the UK and the 1.2 million UK citizens living throughout the EU. Border control between the Republic of Ireland which is an existing member of the European Union and Northern Ireland which is part of the UK will be a part of these discussions.
Brexit negotiations: A power play for the EU
The EU is determined to have the final say on any Brexit deal. Even though they say they do not want to punish the UK for leaving, their demands, if successful, will certainly leave the UK worse off outside the bloc than within it. This move will discourage any other EU member from leaving.
Since last year’s June 23rd referendum result, the sterling has fallen nearly 14% against the US dollar which has resulted in UK inflation nearing a four-year high along with clear signs that Britain’s economy is slowing down.
With these tight negotiations and UK’s current domestic crisis it does appear that today will be the start of a very long and arduous 21 months, if not longer.
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