Barnier chides Brexit talks deadlock

The European side makes the point repeatedly that the onus is on the UK to unlock talks

By BLOOMBERG

BRUSSELS • The European Union (EU) said talks hit a wall over what the UK owes when it leaves, increasing the chances of a messy departure as time is running out to clinch a deal.

“No deal will be a very bad deal, huh? And to be clear on our side we will be ready to face any eventualities and all eventualities,” the EU’s chief Brexit negotiator, Michel Barnier, told reporters in Brussels yesterday. The pound traded down by as much as 0.6% against the euro after Barnier spoke.

On the question of the financial settlement, he said “we have reached a state of deadlock which is very disturbing for thousands of project promoters in Europe and it’s disturbing also for taxpayers”.

The European side made the point repeatedly that the onus was on the UK to unlock talks and that while “decisive progress is within our grasp in the next two months”, it was entirely up to Prime Minister Theresa May’s team to bring its political firepower. That will be hard in a government constantly at war with itself on the direction of Brexit.

From the EU’s perspective, “there’s no question of making concessions”. In what is increasingly heading into a game of brinkmanship, Brexit Secretary David Davis said: “I make no secret of the fact that to provide certainty, we must talk about the future.”

The gridlock means that the EU’s 27 remaining leaders will decide against starting discussions on a post-Brexit trade deal with the UK when they meet in Brussels next week, or on a transitional arrangement to cushion the impact of separation.

Lack of sufficient progress adds to pressure on businesses to speed up contingency plans for what could be a chaotic withdrawal in March 2019.

The next milestone for talks to advance to trade is the Dec 14 summit of EU leaders. The limited concessions May made in a speech in Florence last month prompted unease in certain parts of her Conservative party.

Meanwhile, leaving the EU without a trade deal won’t be cheap.

According to analysis by Rabobank, a so-called hard Brexit would cost about 18% of gross domestic product growth by 2030. That’s about £400 billion (RM2.23 trillion) in absolute terms, or £11,500 per person.

For the researchers, a hard Brexit is leaving the EU without a trade deal in place. Barriers to trade, lower investment, a loss of financial services and lower immigration would all weigh on growth, according to the report, written by economists including Hugo Erken and Raphie Hayat.