Brexit talks halted ahead of key EU summit
Brexit negotiations have seemingly hit a brick wall over the Irish border issue, which may mean the UK will miss the opportunity to close a deal in this week’s European Union summit.
The negotiations reached an impasse last week as the EU sought reassurances to prevent a hard border in Ireland that involved physical checks, as this would breach the terms of the Northern Irish peace process agreement.
Brexit Secretary Dominic Raab travelled to Brussels on Sunday after British and EU officials agreed a blueprint which would effectively keep the UK within the EU’s customs union for the foreseeable future.
Raab met chief EU negotiator Michel Barnier to agree final terms, but the talks were unfruitful.
In a meeting that lasted just over an hour, Raab told Barnier that the volatility of politics in the UK meant that a plan to strike a deal on Monday on the backstop solution was impossible, The Guardian reported.
Raab relayed UK Prime Minister Theresa May's insistence that a “backstop” arrangement would create a border down the Irish Sea and urged the EU to include the rest of the UK in the deal.
Northern Ireland's Democratic Unionist Party, with which May agreed a confidence and supply agreement in order to stay in power, refused to accept the backstop option and has threatened to withdraw its support from the UK government if they were to agree to the EU’s terms.
The party’s Brexit spokesman, Sammy Wilson, said on Monday said "there's no deal which I can see at present which will command a majority in the House of Commons. So it is probably inevitable that we will end up with a no deal scenario."
Senior civil servants have warned the government to start putting contingency plans into effect by the end of the month for the UK crashing out of the EU without a Brexit deal, The Times reported, including stockpiling medicines and telling businesses to begin registering for new customs processes.
It was felt to be unlikely that there will be further attempts to reach an agreement before EU leaders meet on Wednesday for the Brexit summit where it was hoped that the divorce deal could be closed.
Both sides could still agree to a deal by mid-November and parliaments in London and Brussels would have enough time to approve it. If they fail to secure a deal by then, a no-deal scenario is all but inevitable.
The pound was down in early trading but by midday was almost flat at 1.3147.
"The Irish border remains a critical issue, and one which is looking increasingly hard to resolve," said Joshua Mahony, market analyst at IG. "Prime Minister Theresa May appears to be stuck between a rock and a hard place.
"The wide array of opinions within and between political parties in the UK suggests we would be lucky to achieve a form of Brexit that would pass a parliamentary vote, let alone the same form of agreement also being palatable to all EU members. A deal ahead of this week’s EU summit now looks unlikely, and we are now falling behind the planned timeline, raising the possibility of a no-deal Brexit."
The increasingly likelihood of an eleventh hour fudge, said Craig Erlam at Oanda, "won’t surprise anyone who’s followed these talks for the last year and a half".
He said sterling was holding up relatively well despite the stalled progress over the weekend.
"The currency is likely to remain rather volatile over the coming weeks as talks continue and we see increasing amounts of commentary being leaked, not to mention more pressure on the May following reports that more letters of no confidence being submitted, taking the total number to 44, four short of the number required to trigger a vote."