Brexit summit Preview: October summit set to leave agreement open for November last minute Brexit deal

While the Brexit optimism was supporting Sterling during the second week of October, the crack in bilateral negotiations between the UK Brexit Secretary Dominic Raab and the European Union chief Brexit negotiator Michel Barnier last Sunday made a clear indication that no Brexit deal will be made during the October Brexit summit.

Even with numerous rumors indicating Brexit optimism during the second week of October, the latest view from the European Commission President Jean Claude Juncker indicated that the Brexit deal may turn out to be the last minute deal in November turning this week’s summit to become just another round of Brexit discussions.

“We are not where we should be to find an agreement in Irish issue in Brexit talks,” Juncker said for French newspapers Le Monde on Friday, October 12, indicating that the time to reach the Brexit agreement will have to be made between next week’s meeting and possible November Brexit summit.

German European Union minister Michael Roth made a pretty clear indication of last-minute Brexit deal done in November on Tuesday, October 16 saying “we will get the Brexit deal but we must protect EU interests.” Roth’s comment actually supported Sterling on the FX market as it helped to anchor the market expectations of Brexit deal eventually made in near-future.  

Summit agenda

The European Council will start on Wednesday evening with a debate on Brexit with the UK Prime Minister Theresa May addressing the EU27 officials.  Theresa May will present the UK Government's assessment of the negotiations. Later the EU 27 will decide on how to take the negotiations forward, on the basis of a recommendation from the chief negotiator, Michel Barnier. 

The European Council President Donald Tusk already warned the participating parties of the no-deal scenario being very real. “Responsible as we are, we must prepare the EU for a no-deal scenario, which is more likely than ever before. Like the UK, the Commission has started such preparations and will give us an update during the meeting. But let me be absolutely clear. The fact that we are preparing for a no-deal scenario must not, under any circumstances, lead us away from making every effort to reach the best agreement possible, for all sides,” Tusk wrote in a letter on Monday, October 15.

The European Council continues on Thursday at the regular round of EU 28 with the agenda regarding progress in implementing our previous conclusions, including on migration, internal security and external relations presented by Chancellor Sebastian Kurz. 

The Euro group summit will meet informally over lunch in an inclusive format of 27 to discuss the EMU reform state of play. Eurogroup President Centeno will present the update on the ministers' work on the reform, while European Central Bank President Mario Draghi will give his assessment of the situation. In the current global environment, we need to focus especially on strengthening Europe's resilience also on the economic front.

On Friday, the European Council will be followed by the Asia-Europe Meeting (ASEM), with 21 Asian countries, the 28 Member States, along with Norway and Switzerland, discussing the means of fortification of the rules-based international order.