22/10/2018 - Raab Alludes to Extension of Post-Brexit Transition Period

GBP

Britain could accept extending the post-Brexit transition period by a few months if the European Union drops its proposals for a so-called Northern Irish backstop, Britain’s Brexit minister Dominic Raab said on Sunday.

Talks between Britain and the EU have stalled largely over a disagreement on the backstop - an insurance policy to ensure there will be no return to a hard border on the island of Ireland if a future trading relationship is not agreed in time.

The Brexit transition, or implementation period, in which Britain would retain EU rules and so avoid border problems with Ireland, is due to end in December 2020. “It is an obvious possible route as long as it is short, perhaps a few months, and secondly that we know how we get out of it and obviously it has to solve the backstop issue so that that falls away then as a possibility" said Raab.

The possibility of extending the transition and keeping Britain under EU governance with no say in it is highly unpopular with hardline supporters of Brexit. Prime Minister Theresa May signalled it as a possibility this week, which saw her critics use the Sunday newspapers to step up their attacks.

Raab said he did not know when he would next be going to Brussels to negotiate, but a deal needed to be done by the end of November in order to get the legislation through parliament.

EUR

The Italian government expects the European Commission to decide for the first time ever on Tuesday to ask a member state to revise its draft budget, a government source said on Sunday.

The Commission has slammed as an unprecedented breach of EU fiscal rules Italy’s 2019 budget plan, which aims to lift the deficit to 2.4 percent of domestic output next year from 1.8 percent in 2018. Italy’s 2.3 trillion euro (2.03 trillion pounds) public debt, one of the world’s largest, makes the country vulnerable and a potential source of contagion for other euro zone countries.

On Sunday, Deputy Prime Minister Luigi Di Maio said the government was working on the letter it would send to the Commission on Monday, adding he expected a speedy reaction. Di Maio, who leads the ruling anti-establishment 5-Star Movement, said he hoped the explanations Rome would provide “over a long discussion process ... could lead the Commission to share the goals we have set.”

On Friday, credit rating agency Moody’s downgraded Italy’s debt to one notch above junk status citing concerns over the government’s budget plans.

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