UK: Slow progress – ING

James Knightley, Chief International Economist at ING, suggests that there are more polite overtures from PM Theresa May, but Europe holds the line as far as Brexit negotiations are concerned.

Key Quotes

“Reports suggest that the EU leaders dinner last night in Brussels was fairly friendly, but there seems to be little sign of any progress. UK Prime Minister Theresa May continued with the conciliatory tone first heard in the Florence Speech last month and EU leaders responded in a similar style. Angela Merkel reportedly saying she was certain “there will be a good outcome” to the negotiations – although we don’t know if she meant that included the UK.”

“However, there is going to be no further progress on negotiations until the UK is willing to bend on the divorce payment. €20bn in payments for the two year transition period doesn’t cut it for the EU with reports suggests that an extra €20bn is likely to be needed (at least) before the EU is willing to talk future arrangements. With progress being made on citizens’ rights and (supposedly) the Irish border December is a realistic start point for those discussions assuming the UK is willing to be more flexible and stump up an extra bit of cash that amounts to less than 1% of annual GDP.”