Brexit: End of the Line

Even with the EU repeatedly giving the UK more time to consummate a trade deal, the Brexit lock is ticking and December 31 is approaching. The EU has set yet another drop dead date for considering a deal. This one might really be the last, particularly since there have been no leaks about fudges, which would also have to be negotiated agreed by both sides, even if the approval process were simpler.

As we’ll discuss shortly, Johnson has introduced a new issue at the 11th hour, that of wanting EU wide stimulus measures to be included as state aid. It looks like bad faith or incompetence, although Brexiteers fear that this is posturing to cover capitulation on other state aid issues. That’s not consistent with other accounts. For instance, see Politico’s morning e-mail update:

DEADLINES ARE SO 2019: “I took stock with UK Prime Minister Boris Johnson of the on-going negotiations,” said von der Leyen in a statement Thursday evening. She said there was “substantial progress” in post-Brexit trade negotiations, but that fisheries are back as the stumbling block, and bridging the differences “will be very challenging.”

A UK official had a similar take: “Talks have made a bit of progress but it’s very hard to see how we’re going to get there,” they said….The trouble is, “We’re not seeing things eye to eye.” Negotiations continue today, working toward a deadline set by the European Parliament — read on just below for more. “It’s not our deadline,” the U.K. official said, “we’re willing to keep going.”….

And if not? Make no mistake: no deal by Sunday night doesn’t mean a provisional application with Parliament voting next year, according to trade committee Chair Bernd Lange. No deal by Sunday means “no deal” at all, he said.

Festive season voting session: The Parliament “stands ready to organise an extraordinary plenary session towards the end of December, in case an agreement is reached by midnight on Sunday 21st of December, for the European Parliament to debate the outcome of negotiations and consider granting its consent,” said a statement from Parliament’s Conference of Presidents and U.K. Coordination Group.

So much goodwill: That positioning means quite some goodwill on Parliament’s end. MEPs would forego a holiday break — but more importantly, they would forego insisting even on the most basic customary procedures, such as translating a proposed trade agreement, and engage instead in an operation to roll up their sleeves and get a possible deal through in 10 days.

It looks like Barnier felt compelled yet again to try to absolve the EU of UK scapegoating:

Richard North, in a post earlier this week, pointed out that if a deal were reached, all Parliament could do would be to rubber stamp it, a sham democratic process:

The possibility of talks being concluded this week, however, cannot be excluded. But if parliament is then to ratify the agreement, with one day being allocated for a debate in the Commons, and another in the Lords, this makes a mockery of this whole “parliamentary sovereignty” thing.

Members of both houses have not been appraised of the details of the government’s negotiating stance, and nor has there been anything from parliament by way of a formal mandate.

If an agreement comes to pass, members will then be expected to review a document which may run to well over 1,000 pages, in the space of a few hours, before being process complex legislation through both Houses to make it happen.

Since they are being asked, in effect, to ratify an international treaty, not a single word of the deal can be changed anyway, under the current procedure. MPs and peers will be asked to take it or leave it, in an all-or-nothing vote, with the whips out in force to make sure the government gets its way.

The Financial Times reported yesterday that Boris Johnson looks again to be trying to kick over the traces. After some mildly upbeat noises from Ursula von der Leyen (which if you read them closely, tracked Barnier’s “narrow path” formulation, the UK is holding fast on fisheries and introducing a new issue into the talks, that of EU level assistance. From the Financial Times’ Brexit trade talks buffeted by EU Covid relief state aid row:

Brussels’ €750bn Covid-19 recovery package has become a sticking point as post-Brexit trade talks go down to the wire, after Boris Johnson warned that EU-level spending should not be exempt from state-aid restrictions in any agreement.

The UK prime minister’s concerns over EU state-aid policy have aggravated the late-stage brinkmanship over a trade deal, adding to fears that a longstanding row over fishing access could yet derail an agreement, and renewing a sense of gloom in London.

Mr Johnson and Ursula von der Leyen, European Commission president, held a stocktaking call on Thursday evening. Both sides “welcomed substantial progress on many issues”, according to a statement issued by Ms von der Leyen…

The UK’s assessment of the call was bleaker. A government spokesperson said Mr Johnson had told Ms von der Leyen that “the negotiations were now in a serious situation”.

Some “fundamental areas remained difficult” on the issue of fair competition between European and British companies, the UK spokesperson said. On fisheries, Mr Johnson had made clear that the EU position was “simply not reasonable and, if there was to be an agreement, it needed to shift significantly”…

Mr Johnson also warned Ms von der Leyen that EU-level spending, including the Covid-19 recovery fund agreed by the bloc’s 27 leaders this summer, could not be exempt from enforceable principles on state aid to be set out in the trade deal.

Brussels has argued that such spending should not be bound by the common principles because EU-managed programmes, such as regional aid funds, are exempt from the bloc’s state-aid rules. Britain has maintained that this line of argument is irrelevant in the context of an international agreement.

David Foster felt compelled to reiterate on Twitter:

Let us put aside whether the demand on Covid aid has substantive merit. I have to admit to not having seen it mentioned as a major deal point. The pink paper’s account makes it sound as if the UK registered it as an issue, the EU responded, and the UK didn’t pursue it again until just now.

You don’t introduce as ask of this magnitude at the 11th hour if you want an agreement. It’s like the day before the closing on a house, saying that you’ve decided you don’t like the color and want to knock $15,000 off the purchase price because you need to repaint it. You knew about the color just as the UK knew about the Covid package. If you were going to include it in the bargaining items, the time for that was long ago.

Not that I buy this theory, but quite a few Financial Times commentors (Brexit fans) were bemoaning that Johnson’s demand was just a ruse for him to cover capitulating on state aid. But others were jaundiced:


‘The EU has to substantially move’, says Johnson again (after another stock-taking phone call to Leyen). This long-playing record never changes.

There’s two weeks to go, and Johnson believes brinksmanship can yet wring ‘substantial’ changes in Britain’s latest renegotiation with the EU ( a process which has been going on for 37 years).

I do hope he sticks to his line, as the EU will be so glad to disconnect the phone line, and be free of tiresome British pleading on 1st Jan 21.


The fact that the Brexit government has only decided it has a problem with the recovery fund at the last minute, although it is something it has known about for months and which they are, as usual, misrepresenting, shows that they are desperate to appear to be taking things to the wire, especially when coupled with the deluded “threat” that if there isn’t a deal before the end of the transition period then they will not agree to one after it. If that is really true then they would have left the negotiations and start preparing for WTO terms ages ago.

It almost makes me want to see what will happen if the transition period does end without a trade deal.

Finally, the fish are still in play. Johnson, in his official note on his latest chat with von der Leyen, went on about how no country no how had ever given up control over its waters. Richard North debunked that long form, pointing out that countries did that all the time, usually for cash.

Some additional tidbits:

We’re about to find out how Johnson responds to the prospect of finally being out of runway. This may be a first for him. Too bad so many innocents are along for the ride.

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  1. Maff

    North’s comment, ‘With one day being allocated for a debate … makes a mockery of this whole “parliamentary sovereignty” thing’ is a pretty cheap shot. Parliament has delegated the authority to negotiate this agreement to the PM and could pass any motion it wishes insisting on other arrangements but chooses not to. Soon the UK will be free and can watch the EU’s roller-coaster trajectory to either full political union, for which there is zero democratic mandate, or break-up caused by otherwise unresolvable north-south financial stress. Popcorn at the ready!

    1. larry

      You have conflated the issues with regard to the EU and the Euro. The Euro system is a disaster and something will have to be done about it eventually. And the consequences, should nothing substantial be done to resolve its inadequacies, may not be restricted to north-south financial differences. This is not to say that the EU as a trading block does not need reform.

  2. fajensen

    It’s like the day before the closing on a house, saying that you’ve decided you don’t like the color and want to knock $15,000 off the purchase price because you need to repaint it.

    Obviously, you have never sold a house in the UK? This is *Exactly* the kind of stuff that they will pull!

    1. Yves Smith Post author

      In the US, you put down a 10% deposit. If a buyer pulled a stunt like that, the seller would happily take his deposit and walk away. So if people can’t/don’t protect themselves in big ticket transactions, no wonder toffs like BoJo think they can misbehave.

      1. Synoia

        Buying a house in the UK is rife with bad processes. Gazumping (the seller changing the offer acceptance price) is common.

    2. Harry

      Yes, but an instructive analogy anyway. Because that happens in a buyers market, not a sellers market. This has always been like a poker game where both sides think they have a winning hand. It seems to me that the UK side has always been wrong about the strength of its hand, but that’s to be seen. Its when both sides have what they think of as winning hands that you have the big stakes, and massive losses/winnings. Of course, poker is a zero sum game, whereas trade is not.

      Usually in property markets, both sides know whether it is a buyers or sellers market. In this case, it seems one side thinks its a buyers market, and the other a sellers market.

    3. paul

      Certain countries within the kingdom.

      In scotland you make an offer, you have to fulfill it. That’s why sell then buy.

      I’ve seen a few tricky times for people doing it the other way round, sale falls through after buying, correspondent withdraws under exceptions: expensive bridging loans ensue.

      Generally it works OK and paint colour guff would fly out the court doors as if ejected by a burly bouncer.

      1. Chris

        In scotland you make an offer, you have to fulfill it.

        This is a common belief but not actually true (I’ve bought and sold a house in England and bought 3 and sold 2 houses in Scotland). You have just as much right to renege on the sale in Scotland as you do in England right up until exchange of contracts. The only difference, and I agree it is a *massive* difference that *vastly* simplifies the process, is that nobody in Scotland considers it morally acceptable to exercise that right as an expected part of the transaction. Not only would the seller regard you as deeply dishonest, your own solicitor would probably disown you too! Unfortunately, ‘English-style’ estate agents are gradually infiltrating north of the border so it remains to be seen how long the system will remain honourable. In England it’s been a spiv-driven, money-grabbing, free-for-all lottery for decades. It’s no wonder Johnson is PM.

        1. paul

          You have just as much right to renege on the sale

          It is the honour to purchase, not sell, in my experience.
          Having only purchased twice in my life, I was definitely advised of the commitment.
          I was also advised to ignore any caveats on the sale.

  3. fajensen

    There are ways: The contract is often contingent on the buyers getting a mortgage approved. If you know your bank well, you can persuade them to reject the mortgage application. I know someone who did exactly this to get out a house purchase, when a better house became available.

    But, yes, it is very much about a culture. Both sellers and buyers are doing their very best to pull a fast one at all times, at the last possible moment, to look “Sharp”. It is A Tradition!

    1. larry

      This sort of behavior should be criminalized. It is nothing more than ‘sharp practice’, and not in a good sense.

    1. fajensen

      Until it isn’t. This ridiculous farce should have been ended six months ago so that everyone would have had at least some time to know what the rules would actually be, and prepare for them.

      This running the clock all the way to the bitter end is buffoonery of the first order. Guaranteeing that even if there is an agreememt, nobody who depends on it will know what it actually means for another six months before “the customs brochures” are published. Never mind that it will have been approved without scrutiny and all sorts of things will therefore “pop up” later, causing noise and further disruptions, once 28 parliaments get around to reading what it was that they blindly approved and kicks off over it.

      Whoever vetoes the entire thing in the end, right on the finishing line, will be acting responsibly :)=

  4. David

    Reading Yves’s typically lucid and thoughtful contribution I felt it really deserved a considered response. Seeing nothing (yet) from PK, vlade, Clive, Col Smithers etc, I was going to have a go, and then I thought, hey, I actually have no idea what to say. I really do not know what’s going on. I have given up trying to account for the different positions, especially that of the UK, and I’m not sure that anyone, anywhere, in any capital, really has much idea of what’s going on, because even the main players are to some extent in automatic mode, going through the motions with no real idea where they are heading. There are some situations that are just too complex and contradictory to analyse. So rather than another long analytical screed from me, let me hand the mike over to Ludwig Wittgenstein:

    “Whereof we cannot speak, we must needs remain silent .”

    and then William Blake

    “There are things that are known and things that are unknown, and in between there are doors.”

  5. skk

    I have a theory of why deal or no deal will definitely get resolved this weekend. the reason ? The QUEEN !

    She has delayed recording her Christmas message – what she says depends on “deal or no deal”. So she’s likely whispered in their shell-like – “get it done by Sunday”, so I can get on with it and go off

  6. Irrational

    Sunday 20th, not Sunday 21st for the cut-off surely? Or did we somehow get transported into 2021 already?!?

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