Economy

Pound falls on fears of 'bare bones' European Union trade deal

Pound falls on fears of 'bare bones' European Union trade deal”

The EU and Britain open hostilities in Brexit's next bruising chapter on Monday, laying down red lines for a post-divorce future following the UK's dramatic exit from the bloc.

Brussels' chief negotiator Michel Barnier said all aspects of the envisaged agreement would not be completed within 11 months.

Johnson said he would not do that, in a speech that harked back to Britain's past trading successes, promising that his government would again be a champion of free trade and jealously guard his country's new-found "sovereignty". However, he warned there was a challenge to ensure that optimism is not "caught in the crossfire of a tough, public negotiation".

Given the short time frame, Barnier said topics will be worked on in parallel, while the focus will be on progressing those areas where the consequences of a no-deal separation would be most serious.

Mr Johnson favours a deal akin to Canada's, despite Treasury analysis suggesting it would make Britain's economy 4.9% smaller than remaining in the European Union by 2035.

The slide came with comments from UK PM Boris Johnson, who stated that the kingdom does not need for "a free trade agreement to involve accepting European Union rules on competition policy, subsidies, social protection, the environment or anything similar, any more than the European Union should be obliged to accept UK rules". "We are not leaving the EU to undermine European standards - we will not engage in any kind of dumping", he said.

According to the prime minister's office, Johnson will come out swinging against the EU, saying that Britain has no more reason to meet EU standards than the EU has to meet British ones.

"Introducing friction into those supply chains will have implications for our largest manufacturing sector and for all food and drink consumers", he said.

But this new stance actually goes against what Boris Johnson signed in the Political Declaration that accompanied the EU Withdrawal agreement agreed with the other EU nations. He said that sharing security information and arrest warrants would also be on the agenda during negotiations with the UK.

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The prime minister is likely to set out his vision of a Canada-style free trade agreement, with hopes of no tariffs or quotas on trade in goods.

The European Union wants an ambitious zero-tariffs and zero-quotas trade deal with Britain but this will be conditional on open and fair competition between the United Kingdom and the 27-nation bloc it quit last week, the EU's Brexit negotiator said. "This agreement should provide for continued, reciprocal access to markets and to waters with stable quota shares".

But in return, the European Union asks the U.K.to uphold high standards on social affairs, environmental protection and state aid regulation in order to maintain an "open and fair competitions".

Negotiations between Westminster and Brussels are set to get underway in the coming weeks, and the EU's powers that be have thus far repeatedly outlined their desire to maintain freedom of movement and access to British fishing waters after the Brexit transition period ends.

- What is Mr Johnson's response?

"The UK will maintain the highest standards in these areas, better in many respects than those of the European Union without the compulsion of a treaty".

Boris Johnson however insisted that under any agreement "British fishing grounds are first and foremost for British boats".

There is no free trade agreement between them and relations are based on a more limited "partnership framework", with trade governed by World Trade Organisation rules.



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