Brexit Bulletin: Is Davis the Problem?

  • EU negotiator Barnier says trade talks may be months away
  • Davis struck a more combative tone than his boss had in Florence

BlackRock's Harrison Sees Positive Month in Brexit Talks

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It wasn’t the breakthrough Prime Minister Theresa May hoped for.

Less than a week after May talked up the possibility of concessions in her Florence speech, the fourth round of Brexit talks ended much as it had begun.

EU chief negotiator Michel Barnier welcomed the “new dynamic” that May’s speech last week had created but said trade talks could be put off for months while the divorce terms are hashed out. There was some progress on citizens’ rights, with the two sides agreeing on more than they did a month ago, and Barnier said there had been a “useful” discussion of the financial settlement. Not useful enough, however, as the U.K. still hasn’t said where it thinks it’s on the hook, according to Barnier.

There’s one bright spot looking ahead to October, when EU leaders meet at a summit and the U.K. had hoped to get signoff to start on trade talks. European leaders are considering accepting a U.K. request to bring forward talks about the two-year transition period so it can be discussed alongside the divorce. Initially the transition deal—crucial for U.K. businesses trying to avoid a cliff-edge in March 2019—wasn’t on the agenda until the separation and future relationship had been settled.

May is with fellow EU leaders in Tallinn today and while Brexit was off the menu at dinner last night, she’s expected to raise it with German Chancellor Angela Merkel at a meeting later. She’ll probably flesh out the concessions she made last week, particularly her offer to honor the U.K.’s financial obligations and to abide by EU rules during the transition. The EU side is keen for details, as Brexit Secretary David Davis struck a different chord in talks this week to the more conciliatory tone adopted by his boss in the Florence speech.

That has prompted some head-scratching in Brussels. EU officials had expected more progress given the offers in May’s speech and see Davis still pursuing a more combative stance than his boss, according to a person familiar with the negotiations. Even in public, Davis dashed hopes of a deal on the money as soon as he arrived in Brussels and has also been more hard-line on the issue of the European Court of Justice.

More divisions will almost certainly be on display next week as the Conservatives go into their party conference, with a poll showing a majority of Tory members want May out by the time of the next election.

David Davis (left) and Michel Barnier in Brussels on Sep. 28.
Photographer: Dario Pignatelli/Bloomberg

Brexit Latest

Balkan Lesson | The Irish border question is one of thorniest in the Brexit talks: how to avoid a hard international border carving up the island of Ireland. The answer may lie in the Balkans, where the EU has allowed for exceptions so that locals and small cargoes can travel freely across the bloc’s border.

Carney Carries On | The BOE governor won’t let criticism from politicians stop him talking about Brexit. “We will continue to assess and express our independent assessment of the risks,” Carney said on Thursday, as he and the bank marked 20 years of independence.

Bank Transition | British regulators are considering a transition period before implementing a new authorization system for non-U.K. banks after Brexit, Andrew Bailey, the Financial Conduct Authority’s CEO, said in an interview.

Parliament Obstacles | May faces fresh difficulties getting her EU withdrawal bill though parliament after lawmakers in the upper house demanded changes to its provisions for parliamentary scrutiny.

Banks Leaving | May’s proposal last week for a transition period wasn’t enough for big banks. They are forging ahead with plans to create trading hubs elsewhere in the EU, according to people with knowledge of the situation.

Bosses and Workers Unite | The Confederation of British Industry and the Trades Union Congress came together on Thursday in an unusual step to call on the government to make progress on the issue of EU citizens’ rights after “15 months of human poker.”

On the Markets | The pound strengthened on Thursday as investors focused on Barnier’s words about the “new dynamic” in talks. Still, the options market shows investors have gloomier about the pound’s future this week.

And Finally...

Guy Verhofstadt, the plain-speaking Brexit negotiator for the European Parliament, couldn’t resist a dig at Theresa May for her party’s internal strife.

Speaking at the London School of Economics on Thursday night, he joined the long list of wags who’ve had fun with May’s choice of location for her big Brexit speech.

“She chose Florence because Florentine politics in the 15th century make her feel at home, I think. Backstabbing, betrayal, noble families fighting for power.”

Guy Verhofstadt.
Photographer: Simon Dawson/Bloomberg

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