Pound drops as Boris Johnson tells UK to prepare for no deal Brexit - YAHOO FINANCE
OCTOBER 16, 2020
BY Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
UK prime minister Boris Johnson has told Britain to get ready for an “Australian” style Brexit but stopped short of ending trade talks with the European Union altogether.
The prime minister said in a televised address on Friday that the UK would opt for a no-deal Brexit unless there was a “fundamental change in approach” from the EU.
“From the outset, we were totally clear that we wanted nothing more complicated than a Canada-style relationship based on friendship and free trade,” Johnson said.
“To judge by the latest EU summit in Brussels, that won’t work for our EU partners.”
The prime minister said he “had to make a judgement” about the likely outcome of negotiations, with just 10 weeks to go until the end of the transition period.
“I’ve concluded that we should get ready for January 1 with arrangements that are more like Australia’s, based on simple principles of free trade,” he said.
“We will prosper mightily as an independent free trading nation.”
The pound had been trading higher against the euro and dollar but dropped in the wake of the statement. Shortly after the comments, sterling was down 0.2% against the euro (GBPEUR=X) and down 0.1% against the dollar (GBPUSD=X).
Johnson’s statement comes after the passing of his self-imposed deadline of 15 October. The prime minister said at the start of September that the UK must reach a deal with the EU on future trading relations by mid-October, or would walk away from talks.
Negotiations between the two sides appear to have lost momentum in recent days. Lord David Frost, the UK’s chief Brexit negotiator, tweeted on Thursday evening he was “surprised” and “disappointed” that the EU had moved away from plans for intense, daily negotiations agreed at the start of the month. The EU has said that “all future moves must come from UK,” Lord Frost said.
Britain will leave the Brexit transition period on 1 January 2021. It needs to agree on a trade deal well before then in order to give both sides time to ratify the deal. Negotiations have stalled on issues such as state aid and fisheries.
“Boris wants to talk tough and ramp the no deal rhetoric but it’s for the crowds – talks are ongoing,” said Neil Wilson, chief market analyst at Markets.com.
“Time is tight but a thin or skinny trade deal ought to be accomplished. An informal meeting of heads of state in Berlin scheduled for 16 November may be the crunch point.”
The Institute of Directors said on Friday that a quarter of businesses were stockpiling in anticipation of disruption at the end of the Brexit transition period.