Now that the technical aspect of leaving the EU has happened on paper, we are into the implementation period, but the negotiations will soon get going once again.
The pound fell today as in a speech which actually overlapped Michel Barnier’s opening salvo with competing coverage, Boris Johnson reiterated his view that alignment with EU regulations is not something the UK government will commit to.
Remember, we have until December 31st this year to have a new free trade agreement (FTA) in place with the EU, or we will revert to World Trade Organisation rules, which will mean tariffs are automatically erected between the continent and the UK.
A lot depends on how these trade talks appear to be going, but the EU has opened with a characteristically hard-line view: Britain must keep its waters open to European vessels, and it must sign up the EU rule book on a ton of regulatory areas if it is to keep its access to tariff-free trade with the Single Market.
With Johnson in a much stronger domestic position than his predecessor Theresa May, it will be interesting to see if the EU’s resolve is quite as stiff as it has been in the past, and even Jean-Claude Juncker, the recently departed president of the European Commission, described Boris as a “tough” negotiator.
Something to keep an eye out for is how the business world seems to be reacting to events in the negotiating chamber. A story broke today about some unnamed Nissan insiders who think that the company is planning to bet big on the UK even if those tariffs are introduced.
Their plan, apparently, is to pull out of Europe altogether, where the firm is getting battered by the collapse in diesel sales, and massively increase its UK production capacity with the aim of becoming a 20% market-share manufacturer among UK consumers.
Currently its slice of the pie is only about 4%, and despite the firm’s denials of these plans, the story is everywhere including the FT and the Guardian, which usually suggests these outlets have been able to corroborate the sources and their claims.
It follows news from last week that around 1,300 financial services companies from the continent are planning to open UK offices in the event of an insufficiently comprehensive FTA, because while the EU is wielding the “passporting rights” of UK financial services firms to operate in the EU, limitations on this freedom pose an equal and opposite problem for European firms who are used to having the ability to channel trades through the City of London.
Keep your eyes peeled, because now that it is certain the UK has left the EU, many companies will begin to publicise innovative strategies for coping with what is now inevitable.