Brexit Bulletin: Summer Days Drifting Away

  • Barnier briefs ambassadors in last appointment before summer holiday
  • ECJ remains major stumbling block in talks

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The Brexit negotiations are entering a summer break with no plans for formal talks before the last week of August.

The problem, as Bloomberg’s Nikos Chrysoloras writes on Wednesday, is that very little headway has been made in two rounds of discussions. Critical issues such as the rights of European Union citizens in Britain and how much the U.K. should pay on leaving have still to be resolved. 

The EU's chief Brexit negotiator, Michel Barnier.
Photographer: Dario Pignatelli/Bloomberg

The European Parliament, which can veto any deal, said on Tuesday the final pact must be directly enforceable and allow for the European Court of Justice to play a full role. Britain wants to end the ECJ’s say in its laws. The European Commission, meanwhile, says Brexit will create a gap of as much of 12 billion euros ($14 billion) after 2020. 

The to-and-fro is throwing into jeopardy British hopes that the EU governments will use an October summit to declare enough “sufficient progress” had been made on these topics to shift the debate to the long-term trade pact May is seeking.

As Nikos writes:

“Given the complexity of the task at hand, and bearing in mind that it may take weeks to form a government in Germany after elections on Sept. 24, it’s becoming increasingly likely trade talks may not get the green light before an EU summit on Dec. 19.”

 

The EUs chief Brexit negotiator, Michel Barnier, is scheduled to brief the blocs ambassadors in Brussels today, his last official engagement before the summer recess.

Business Boost

May enjoyed some rare good news from businesses after weeks of being warned by companies about the economic risks of Brexit.

Minis in Oxford.
Photographer: Chris Ratcliffe/Bloomberg

BMW and Amazon.com on Tuesday both announced plans to invest in Britain even as its split with the European Union nears. The carmaker will build an electric version of the iconic Mini compact car in Oxford, while Amazon will expand its new London headquarters.

The announcements came after banks and businesses activated plans to protect themselves against the consequences of Britain's departure from the EU, its biggest market. Deutsche Bank said it will shift staff and money to Frankfurt, while EasyJet said it would create a new airline based in Vienna.

BMW still has some wiggle room if Brexit does backfire, with a person familiar with the matter saying it was only committing to using the British plant until at least 2023.

The carmaker was among the key companies Bloomberg monitors as a way of gauging the success of Brexit. Read more here.

Fox on Chicken Run

U.K. Trade Secretary Liam Fox was in Washington seeking a trade deal, but despite the enthusiastic endorsement by President Donald Trump his trip got bogged down by chlorinated chicken.

Flaunting the “special relationship” with the Americans masks the reality that any trade deal will take years and run into all sorts of difficulties, from clashing regulatory practices to the powerful farming lobby. The media storm back in London over how U.S. hygiene rules allow chicken to be washed in chlorine offers a glimpse of the battles in store.

“We’re setting U.K. conditions, U.K. standards,” said Fox in an interview with Michael McKee on Bloomberg Television. “We’re neither going to be members of the European Union nor are we totally bound to the United States.”

In Prague, Brexit Secretary David Davis sounded more optimistic than Fox by predicting a trade deal with the EU could be delivered in two years.

Brexit in Brief

  • The battle to control euro clearing after Brexit is getting uglier. At a meeting in London on Tuesday, managers from London Stock Exchange Group’s LCH and Deutsche Boerse’s Eurex Clearing clashed in public for the first time
  • Northern Trust Asset Management’s largest clients including sovereign wealth funds are separating their U.K. assets from their European and global portfolios as they await the outcome of Brexit, says Wayne Bowers, chief executive officer for Europe and Asia
  • Keir Starmer, the U.K. opposition Labour Party’s Brexit spokesman, turns down a job at Mishcon de Reya after lawmakers criticized his discussions with the law firm, which has backed cases against Brexit
  • Bank of America and other firms’ decisions to expand Dublin operation “bodes well” for Hibernia REIT’s office portfolio,  says CEO Kevin Nowlansay
  • U.K. factory production reached a two-decade high last quarter as optimism about export orders swelled to the highest since the 1970s
  • Former U.K. Independence Party leader Nigel Farage writes in the Telegraph that May has “sold out the British people.”

And Finally…

When Gregory Migut landed a job at Traditional Norfolk Poultry last year, it was the latest step in his climb from near-penniless immigrant to middle-class manager, 12 years after he left his native Poland.

Gregory Migut, left, with Mark Gorton.
Photographer: Luke MacGregor/Bloomberg

Instead of feeling like he’s made it, he’s fretting about Britain’s impending departure from the EU, which threatens his ability and that of 3 million other EU citizens to stay in the country.

Stephanie Baker tells his story as part of our reporting from the front lines of Brexit.

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