(Bloomberg) — Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.
The Brexit negotiations have taken a step forward with detailed talks set to begin for the first time since Boris Johnson became U.K. prime minister. The pound and U.K. banking stocks surged.
After months of war-like rhetoric and threats, Johnson made a vital breakthrough in talks with Irish leader Leo Varadkar on Thursday, paving the way for detailed negotiations to start in Brussels.
The two negotiating teams now have a weekend of intensive work ahead of them, examining draft legal text as they try to thrash out a deal in time for the summit of EU leaders on Oct. 17-18.
But while the mood has brightened dramatically, the deal is not yet done. For one thing, it’s not clear what concessions — if any — Johnson has promised the EU, and whether he can get any deal through Parliament in London. The critical issue remains how to avoid a “hard” border, with customs checkpoints, at the land frontier between Ireland and the U.K after Brexit.
“There is a joint feeling that there is a way forward that we can see a pathway to a deal,” Johnson told broadcasters on Friday. “That doesn’t mean it’s a done deal. There’s work to be done.”
Michel Barnier briefs EU ambassadors, but won’t reveal details of the U.K. concessionsEU agrees for detailed talks to intensify as negotiators aim for a dealBarnier hosted U.K. Brexit Secretary Steve Barclay for “constructive” meeting in BrusselsJohnson is keeping his Northern Irish Allies in the Democratic Unionist Party informed of his negotiations as they are key to ensuring any deal can pass a vote in ParliamentPound surges; RBS and Lloyds shares jump
The DUP Responds (4:40 p.m.)
Democratic Unionist Party leader Arlene Foster has finally given her reaction to Johnson’s latest offer. She reiterated her requirement that any deal must have the consent of the unionist community and fired a warning shot against any attempt to keep Northern Ireland in the EU’s single market.
But, crucially, she didn’t go as far as to explicitly rule out supporting the prime minister. She said the party will use its “pivotal role” and “considerable influence” in Parliament to influence the outcome.
“There will need to be a clear acceptance that the economic and constitutional integrity of the whole of the United Kingdom will have to be respected as we leave,” she said. “As a consequence of the mandate given to us by voters in 2017 the DUP is very relevant in the Parliamentary arithmetic and regardless of the ups and downs of the Brexit discussions that has not changed.”
The DUP is in a formal arrangement to support Boris Johnson’s minority Conservative government and keep it in power. While it only has 10 votes in the House of Commons, some hardline Conservative MPs have indicated they will only back a Brexit deal if the DUP supports it too.
U.K. Welcomes EU Talks Decision (3:45 p.m.)
Boris Johnson’s office issued a statement welcoming the decision by the 27 other EU member states and saying his government is looking forward to negotiations “in the coming days.”
“We welcome this decision, following the constructive meeting between the Brexit Secretary Stephen Barclay and Michel Barnier this morning, and building on the meeting between the prime minister and the Taoiseach yesterday,” Johnson’s team said in the statement. “We look forward to these intensified discussions in the coming days.”
Industry Groups Raise Fears About Johnson’s Plan (3:40 p.m.)
The U.K.’s aerospace, automotive, chemicals, food and drink and pharmaceutical sectors are concerned about Johnson’s plans for post-Brexit trading arrangements, the BBC reported, citing a letter sent by the group to the government. The plans can pose “serious risk to manufacturing competitiveness,” the letter said.
In the letter, the industry representatives express their “growing concern” that British negotiators have dropped existing commitments to maintain regulatory alignment with the EU in relevant sectors. They also demanded reassurances that industry interests will be prioritized.
Boris Johnson Is Elusive (2:57 p.m.)
Johnson struck a cautious, yet optimistic note, in his first public comments since his meeting with Varadkar.
“There is a joint feeling that there is a way forward that we can see a pathway to a deal,” the British prime minister told broadcasters in a pooled interview on Friday. “That doesn’t mean it’s a done deal. There’s work to be done.”
He went on to say it “would be wrong of me to giving a running commentary on the negotiations. With the greatest possible respect I think, look at everything I’ve said previously. I think you can draw your own conclusions from that. But let’s our negotiators get on.”
Pressed on what solutions he had proposed for the contentious Irish border question, Johnson said: “I can certainly tell you that under no circumstances will we see anything that damages the ability of the whole of the United Kingdom to take full advantage of Brexit, and I think that’s what people would expect, and that’s what I think we can achieve.”
The pound, in the meantime, keeps rising. It’s now up 2%.
The Devil Is in the Detail (2:06 p.m.)
Barnier told the ambassadors that the U.K. had made concessions on both customs and consent without going into detail, an official said. Several ambassadors told him that the only thing that would work would be if the U.K. accepted the need for a Northern Ireland-only backstop, similar to the one thrashed out by the two sides last year, but Barnier refused to confirm that this was the plan, the official said.
The issue about consent revolves around how the people of Northern Ireland should give their democratic consent to any agreement. It would involve some kind of regular sign-of from the region’s assembly.
Question Is What Might the U.K. Have Given Up (1:47 p.m.)
The U.K. conceded on some key issues that were standing in the way, an EU diplomat said following the debrief with Barnier. We are now looking to weekend negotiations, the diplomat representing one of the bloc’s member states, added.
A second official, who was present in the debrief, said Barnier didn’t clarify what these U.K concessions might be. It’s an important question given how the U.K. depends on a Northern Ireland unionist party for backing in parliament.
The EU Commission’s negotiator hinted that they are related to customs, and that we are heading toward a solution almost identical to the original Northern Ireland-only backstop, the ambassador said, asking not to be named, as the debrief wasn’t public.
The bad scenario for this weekend is a backtracking from the U.K, in which case Barnier said he ’d discontinue the talks, the ambassador said. The good scenario is to bring a deal which resembles the original Northern Ireland-only backstop proposal of February 2018.In the latter case, a short technical extension may be required, the diplomat said.
The meeting with Barnier was tense, with the French ambassador getting annoyed at one point because of the leaks to the media.
Nothing Has Changed on Irish Border (1:38 p.m.)
Let’s stay cautious. That is the message that resonated from the EU as speculation amped up on whether or not the divorce talks were headed into the final sprint.
After meeting with his U.K. counterpart Stephen Barclay on Friday, Barnier told ambassadors from the 27 member states that there has been enough progress for talks to intensify.
That isn’t quite the same as entering the so-called “tunnel” — the formal Brussels process by which the actual legal text of an agreement is thrashed out in secret — but it’s a sign both sides recognize a deal is still possible.
Is It All Headed Into Secret Talks? (1:30 p.m.)
So, EU envoys were briefed about a “possible convergence” between Ireland and the U.K, but a lot remains to be negotiated, a participant in the debrief with Barnier said. Ambassadors will reconvene either Sunday or Monday to take stock of the situation, the official said. The gist is to steer clear of using the word, tunnel, which implies a secretive process.
What is obvious is that enough progress has been made to keep negotiating through the weekend with the aim of reaching a deal, instead of declaring talks dead today as Tusk said the plan was.
Johnson Keeping Foster in Brexit Loop (12:30 p.m.)
Boris Johnson has spoken to Arlene Foster, leader of the Democratic Unionist Party, about his Brexit proposals, according to a U.K. official.
His office is keeping the DUP informed of the status of talks, aware that the party’s support for any deal could be crucial to it passing though The House of Commons.
Pound Optimism Continues as Banks Surge (11:55 a.m.)
The pound is now headed for its biggest two-day rally since before the Brexit vote in June 2016. The latest step higher came after a European Commission spokeswoman labeled the talks “constructive” (see 11:20 a.m.).
Its not just the currency where optimism is mounting. Shares in Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc are up more than 9 %.
Barclay-Barnier Meeting ‘Constructive,’ EU Says (11:20 a.m.)
The European Commission was tight-lipped about the outcome of Friday morning’s meeting between EU chief Brexit negotiator Michel Barnier and U.K. Brexit Secretary Stephen Barclay, with a spokeswoman saying only that the talks were “constructive.”
“You can assume they exchanged ideas, discussed many different angles,” Mina Andreeva told reporters in Brussels. “If there’s a will then of course there’s a way, otherwise people wouldn’t be working on this.”
A U.K. spokesman used the same word to describe the talks.
Brexit Talks May Enter Tunnel, Varadkar Says (11 a.m.)
U.K. and EU negotiators may now enter the so-called tunnel for Brexit talks, Irish Prime Minister Leo Varadkar told reporters in Dublin.
The focus is now on Brussels, he said, adding that he expects the U.K. will make more detailed proposals. The less said publicly about the talks the better, he said.
DUP Lawmaker Warns on Stormont Veto (10.35 a.m.)
Removing the so-called Stormont lock from any Brexit deal would leave Northern Ireland’s unionists “marooned,” Democratic Unionist Party lawmaker Jim Wells warned in an RTE radio interview.
Northern Ireland Secretary Julian Smith’s suggestion that no one party in the region would have a veto through a vote in the Northern Ireland Assembly “does worry me,” Wells said, adding that “nothing will work unless unionism is signed up to it.”
Acknowledging there had been a change of mood in the talks after Varadkar and Johnson’s meeting on Thursday, Wells, who is a member of the suspended Assembly, made clear that any plan which would force Northern Ireland to follow EU rules would be “unacceptable.”
Pound Rises Again on Brexit Optimism (10:25 a.m.)
The pound has surged 2.5% since Wednesday’s close, with traders jumping on the signs of Brexit optimism.
It gained 0.6% to $1.2511 Friday, with Donald Tusk’s comments (see 10 a.m.) adding to the momentum. Deutsche Bank said Thursday evening it was no longer negative on the U.K. currency following a “pivotal moment” in Brexit talks.
Options show sentiment on the pound over the next month is now the most positive since Bloomberg began compiling the data in 2003.
Ireland: Detailed Talks Will Start (10:05 a.m.)
While Thursday’s meeting between Johnson and Varadkar was positive, the “real detailed negotiation and technical work now will begin and that will be in Brussels,” Irish Finance Minister Paschal Donohoe said.
Speaking on Newstalk radio, Donohoe pointed to the issue of allowing the region of Northern Ireland to give or withhold “consent” for any new customs system as a crucial area for discussion in the talks. There are differing views in the region on the issue, he said.
EU’s Tusk Says ‘Promising’ Signals for a Deal (10 a.m.)
EU Council President Donald Tusk gave some mixed messages over the chances of a Brexit deal, saying the U.K.’s proposals aren’t yet realistic but there are “promising signals.”
“Unfortunately we are still in a situation in which the U.K. has not come forward with a workable, realistic proposal,” Tusk said in a televised statement in Cyprus. “A week ago I told Prime Minister Johnson that if there was no such proposal by today I would announce publicly there are no more chances” of a deal at next week’s summit of EU leaders.
But Tusk said there was some positive news out of Thursday’s meeting between Johnson and Irish Prime Minister Leo Varadkar.
“I have received promising signals from the Taoiseach that a deal is still possible,” he said. “Technical talks are taking place in Brussels as we speak. Of course there’s no guarantee of success and the time is practically up, but even the slightest chance must be used.”
AB InBev Shelves U.K. Expansion On Brexit Fears (9:40 a.m.)
Brewing giant Anheuser-Busch InBev SA put on hold plans to roughly double the size of its U.K. headquarters amid growing uncertainty over Brexit.
The Belgian owner of Budweiser and Corona had been in talks to lease additional space in London’s Bureau building, where it already occupies the top four floors, two people with knowledge of the matter said.
Fianna Fail Expects Talks to Resume (9.15 a.m.)
The leader of Ireland’s main opposition party expects U.K. and EU negotiators to resume formal Brexit talks after Irish PM Leo Varadkar and U.K. leader Boris Johnson met on Thursday.
Micheal Martin, who leads the Fianna Fail party, said he would be disappointed if talks don’t restart. “In good diplomacy there has to be accommodation and you can’t have one side losing face against the other,” he told RTE radio.
Martin’s party is in a confidence and supply arrangement with the government, so is consulted on most major government decisions. He is likely to have been briefed on Thursday’s meeting.
Barclay and Barnier Meet in Brussels (8:30 a.m.)
U.K. Brexit Secretary Steve Barclay has arrived at the European Commission in Brussels for talks with the EU’s chief negotiator, Michel Barnier. The two will explore where things stand after Thursday’s meeting between the prime ministers of the U.K. and Ireland and discuss whether to restart more intensive talks.
There’s no scheduled time for the meeting to end but Barnier is due to address EU ambassadors at 12:30 p.m. Brussels time.
Brexit Hopes Rise as U.K. and EU Take a Step Closer to a DealBoris Johnson’s Irish ’Pathway’ Is Full of Holes: Lionel LaurentImagine Brexit Heaven. It Isn’t Easy, I’ve Tried: John Authers
–With assistance from Tim Ross, Charlotte Ryan and Peter Flanagan.
To contact the reporters on this story: Ian Wishart in Brussels at firstname.lastname@example.org;Nikos Chrysoloras in Brussels at email@example.com;Tiago Ramos Alfaro in London at firstname.lastname@example.org
To contact the editors responsible for this story: Flavia Krause-Jackson at email@example.com, Thomas Penny, Raymond Colitt
bloomberg.com” data-reactid=”109″>For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.