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The European Parliament yesterday adopted a resolution, by 516 votes to 133, outlining its ‘red lines’ in the upcoming Brexit negotiations. One of the principles of the resolution states that any transition arrangements can only last a maximum of three years after the UK departs, “With the Court of Justice of the European Union responsible for settling any legal challenges” during the transition period. Another warns that, “Whatever the outcome of the negotiations on the future EU-UK relationship, they cannot involve any trade-off between internal and external security including defence cooperation.”
Speaking during the debate, President of the European Commission, Jean-Claude Juncker, warned that a “no deal [scenario] means no winners. Everybody will lose. That’s why we will proceed with negotiations with the UK to try to reduce the damage caused to people, to trade, and to societies. Will we miss the UK? Yes, but without naivety.” Michel Barnier, the Commission’s chief Brexit negotiator, followed up by saying, “Our common objective is to succeed in this negotiation. That means reaching an agreement.” He outlined three pre-conditions for the Brexit talks to succeed; the unity of the EU-27, remove uncertainty and insecurity, and the phasing of negotiations. Barnier acknowledged the UK calling for parallel negotiations on the withdrawal and on the future relationship but called this a “very risky approach,” adding, “We are not proposing this to be tactical or to create difficulties for the UK. On the contrary, it is an essential condition to maximise our chances to reach an agreement within two years.”
Barnier stressed that, “There must be a single financial settlement, covering all commitments made by the UK as a member state. We need to clearly say that we will never punish the UK or make it pay a single euro more than what it owes. But it must honour the commitments we have taken together.” On the issue of the Irish border he said, “We will work towards arrangements that do not call into question the existing peace process, the Good Friday Agreement, whilst being compatible with Union law.”
Separately, Bloomberg reports that Poland wants the EU and UK to hold talks simultaneously on the withdrawal agreement and future relationship.
European Parliament: Negotiations with the United Kingdom following its notification that it intends to withdraw from the European Union The Independent: Barnier full speech The Independent 2 Bloomberg Brexit Bulletin
CEO of JP Morgan, Jamie Dimon, has said that, while the bank is preparing for a Brexit situation where the UK loses access to the EU single market, “This does not entail moving many people in the next two years.” Dimon also said he hoped Britain’s departure would encourage the EU towards “fixing its issues,” adding, “Our fear, however, is that it could instead result in political unrest that would force the EU to split apart…We will keep a close eye on the situation in Europe over the next several years.” Dimon had previously hinted at potentially moving up to 4000 jobs from London.
The Daily Telegraph reports that Prime Minister Theresa May has held talks during her visit to the Middle East with Khalid Al-Falih, the Saudi Arabian energy minister and chairman of the state-owned oil company Saudi Aramco, and Sir Xavier Rolet, the chairman of the London Stock Exchange (LSE). The talks were expected to address a bid for the LSE to host Saudi Aramco’s flotation. A Downing Street spokesman said May “set out the advantages of listing in London,” including the city’s “depth of expertise,” as she attempted to secure for London what would be the largest share flotation in history, with a five per cent share offering, expected to see the company valued at £1.6 trillion.
Separately, the Financial Times reports that a bilateral investment treaty between the UK and India has lapsed. The Chancellor, Philip Hammond, is currently on a trade visit to India, where he stressed that the UK and India’s “cultural ties” would help the two countries strike a new trade agreement, arguing, “We have a legal system and a governance system that is still visibly in the same mould.”
The Daily Telegraph
The Financial Times
One of the Bank of England’s rate-setters, Gertjan Vlieghe, has warned against a premature hike of the Bank’s base rate of interest, saying, “The consumer slowdown, which initially did not materialise [following the Brexit vote], now appears to be underway.” He added, “Given the hit to real income from a mix of subdued wage growth and rising inflation, I think the slowdown is more likely to intensify than fade away.” The BoE interest rate, currently 0.25%, is not expected to be adjusted this year.
EU trade commissioner, Cecilia Malmström, and Australian trade minister, Steven Ciobo, have “concluded discussions on the scope of a potential bilateral free trade agreement.” Malmström said she was now “looking forward to receiving a mandate from member states” to start negotiations “soon” with Australia.