Amid Stalemate Over Bill, Brexit Talks End in Acrimony

There were tensions as the European Union’s negotiator mocked Prime Minister Theresa May even as Brexit talks ended in stalemate, with both sides deadlocked over the divorce bill.

Britain wants a deal that’s impossible to achieve and is refusing to acknowledge its financial obligations, Michel Barnier said.

The “sufficient progress” needed to move on to trade talks hasn’t been made, in the coded language of the EU.

The chances of the U.K. tumbling out of the EU without a deal in 2019 increases with the failure of the talks and following that, the pound weakened to its lowest in a week.

When Barnier cited May’s oft-repeated and much derided slogans to make the point that the U.K. cannot have it all made the acrimony clear.

“Brexit means Brexit, leaving the single market, means leaving the single market and if that’s what’s been decided there will be consequences,” Barnier told a news conference in Brussels alongside Brexit Secretary David Davis.

It’s now looking unlikely that the EU they will start negotiations on the future relationship at the next summit in October because it cannot begin until EU leaders agree to it. Leaving barely a year to sort a trade deal, that would push it back to December.

Skepticism in Brussels have bene prompted by the U.K.’s request for a bespoke transition deal, rather than seeking a simpler extension of the status quo, and the EU won’t discuss transitional arrangements until progress has been made on the divorce issues.

It has no obligations after Brexit and it’s only on the hook for annual payments while a member, EU officials told reporters about the U.K. position on the bill. They said that there was no discussion on the possible costs of a transitional deal.

According to people familiar with the U.K. position, the British team used the sessions to pick holes in the EU’s calculations, and refused to set out what it’s prepared to pay for.

“This week it is clear that the U.K. does not feel legally obliged to honor these obligations after departure,” Barnier said.

After Barnier’s comments., the pound fell to a one-week low. Still, as traders get inured to Brexit news, swings in the pound are becoming restrained. In a sign that traders don’t expecting much action over the next three months, the implied volatility on the pound is the second-lowest of the Group-of-10 currencies.

U.K. is trying to set its own rules but also have those standards and regulations recognized automatically in the EU and seeking to “take back control”, said Barnier slamming the U.K. for wanting it both ways.

Saying the talks were a “stepping stone” to future rounds, Davis had a different view. In a rare sign of agreement, both sides agreed that talks on the Irish border were “fruitful”. The U.K. is right to examine the bill line by line and obligations “have to be specified, have to be real,” he said about the bill.

“The British taxpayer would expect nothing less,” he said.

(Adapted from Bloomberg


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