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Remember All That Talk About Brexit Progress? Yea, It Was All Poppycock

Remember All That Talk About Brexit Progress? Yea, It Was All Poppycock

The last prime minister of the United Kingdom of Great Britain and Northern Ireland. By EU2017EE Estonian Presidency (Theresa May) [CC BY 2.0], via Wikimedia Commons

Tomorrow was supposed to be the day we finally found out what Brexit meant, what all of the meaningful progress had added up to, when Theresa May and her erstwhile allies and partners clasped hands and pronounced “peace in our time.” As it turns out—to no one’s surprise—this was yet another Brexit fantasy waiting to be dashed upon the White Cliffs of Dover.

Of course, there’s been no meaningful progress, because it is impossible. Both sides say a hard border in Northern Ireland is unthinkable; unfortunately so is any solution that might prevent it. So the planned draft declaration on a future trade deal is off, next month’s meeting to finalize it is off, and now the remaining EU members are getting ready to start talking among themselves about just unceremoniously bidding Britain adieu on March 29. Things have gotten so bad that May had to convene her Cabinet to get their approval for her negotiating strategy, because that went so well last time. EU President Donald Tusk hopes they managed to figure something out in two-and-a-half hours that has thus far eluded them for a year-and-a-half.

“For a breakthrough to take place, besides goodwill we need new facts. Tomorrow I’m going to ask Prime Minister May whether she has concrete proposals on how to break the impasse. Only such proposals can determine if a breakthrough is possible.”

In case a Brexit agreement is not reached — “or in case it is rejected” — leaders at Wednesday’s meeting “will discuss how to step up our preparations for a no-deal scenario,” Tusk said….

“The problem is clear,” Tusk told reporters. “It’s still the Irish question, the problem of the border between Ireland and Northern Ireland and the so-called backstop.” He described it as a “new version of the Gordian knot,” adding that he couldn’t see a new version of Alexander the Great around to solve it.

“I hope that tomorrow Prime Minister May will present something creative enough to solve this impasse,” he said.

It is fitting that that something impossible—an amicable divorce between the U.K. and EU—relies on something else impossible, creativity from Theresa May. But enough about that. On to the important matters, like what does this all mean for the derivatives contracts?

Loans, securities and derivatives totaling approximately €2.4 trillion ($2.7 trillion) might have to be shifted to EU-based bank entities if Britain becomes a so-called third country after a hard Brexit, according to estimates by consulting firm Boston Consulting Group U.K. LLP…. Connected to that is the question of whether existing contracts have to be rewritten or duplicated, or whether the changes will only apply to future instruments. “The conversion or renegotiation of master contracts causes a significant bureaucratic burden that can take months,” Mr. Bohner said.

European Firms Mull Moving Financial Contracts as Brexit Looms [WSJ]
Tusk Says Breaking ‘Impasse’ Needs U.K. Proposals [Bloomberg]
EU scraps plans for Brexit summit statement on future trade deal [Guardian]
May calls for unity after getting cabinet backing for Brexit strategy [Guardian]

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