30/11/2017 - More Work to Done Before Trade Talks Begin

EUR

EU officials yesterday stated that the EU is yet to confirm a deal with Britain over the “Brexit bill”. They added that progress on a cash settlement has overshadowed differences over the other two key issues, namely citizens’ rights and the Irish border which need to be addressed before the UK can start negotiations on a future trade pact.

The European commission’s negotiator Michel Barnier was yesterday quoted saying “we are not there yet” when questioned about the UK’s new offer but that his team has broadly accepted an offer of around 50 billion euros, 10 billion short of EU estimates. 

Despite his comments, Barnier said that work was continuing on all three issues and that he hopes to be able to inform EU leaders at next month’s summit that “sufficient progress” has been made.

Despite Britain bowing to the EU’s demands, some European governments are still concerned that London may push back harder on the other two issues. Brussels has made it clear that it wants to have some influence over the rights of EU citizens living in the UK and also wants a soft customs border with EU member Ireland in order to prevent disrupting the peace process.

An EU diplomat added that Britain was “trying to sideline Irish concerns by moving on the money”, saying a split on this could still scupper any deal on trade talks next month. Another representative warned that a collapse in talks was still possible adding that “Deal or settlement are not the words I would use,” 

Officials from both sides have so far downplayed reports that negotiators had agreed on an exact figure. Both parties have always maintained the view that the final settlement amount will depend on future variables and that their focus was on agreeing a "methodology"

May is set to meet Barnier and commission president Jean Claude Juncker on 4 December which is the “absolute deadline” to deliver offers in all three areas so that EU leaders can give approval at next month’s summit which will take place between Dec 14-15.

Key Announcements

10:00 -EUR: CPI Estimate y/y: Forecast to be higher at 1.6% against a previous level of 1.4%

13:30 -USD: Unemployment Claims: Forecast at 241K against a previous of 239K