EU agrees on need for Brexit extension but cannot decide on length

Pedro Gonçalves
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EU agrees on need for Brexit extension but cannot decide on length

EU ambassadors have agreed that a Brexit extension is needed but have postponed a decision on how long to delay Britain's exit from the bloc until next week.

Michel Barnier said the EU27 has not been able to make a decision on the length of the next Brexit delay because of the ongoing debate in the UK over Boris Johnson's demand for a general election in December.

Johnson's claim that he will pull the withdrawal agreement bill and "go on strike" if Labour rejects his demand for a general election on 12 December has rung alarm bells in Brussels.

The significant drop in the value of the pound since the referendum has contributed to reducing people's purchasing power and a drop in UK living standards"

An EU official added after the meeting of the 27 national envoys from countries that will stay in the EU after Britain leaves to discuss London's request to postpone Brexit beyond Oct 31 that there was full agreement on the need for an extension.

"Work will continue over the weekend. (27 EU ambassadors) are expected to meet early next week, on Monday or Tuesday, to finalise an agreement," the person added, stressing that the bloc would not call a special summit of leaders to do that.

The British government expects the EU to delay Brexit by three months, according to British chancellor of the exchequer Sajid Javid.

France's president, Emmanuel Macron, has said a three-month extension would only make sense if there was going to be a general election.

Earlier, EU Trade Commissioner Phil Hogan has said there will not be a no-deal Brexit, despite the continuing uncertainty in the UK parliament over the future of the current government.

The UK would leave earlier if the withdrawal agreement was ratified in Westminster and by the European parliament.

The pound was down as much as 0.2% against the dollar as trading opened on Friday and was last trading at $1.2845 . It saw similar losses against the euro, at 86.545 pence.

Sterling has now erased its gains for the week as hopes the British parliament would pass Johnson's Brexit deal turned into more political uncertainty.

Nigel Green, CEO of deVere warned: "Whether it is Boris Johnson's preferred date of 12 December or a few weeks later, a general election is looming on the horizon for the UK. 

"An election in itself will create further woes for the already Brexit-battered British pound as they always fuel uncertainty.

"We immediately saw this in action on Thursday when sterling - the worst-performing major currency of the G10 - fell from its recent multi-month highs and took a turn lower following the announcement Boris Johnson will seek a general election before Christmas.

"Whilst the beleaguered pound does have much of the Brexit shenanigans already priced-in, Jeremy Corbyn's decision to instruct Labour MPs to abstain or vote against Monday's general election vote will ramp up the uncertainty further - thereby extending the pound's losses.

"Should Labour adhere to Mr Corbyn's instructions, the PM would then not have the numbers - as abstentions count against under the FTPA - and no election will take place on December 12. This begs the question: when will the election take place?"

He continues: "The significant drop in the value of the pound since the referendum has contributed to reducing people's purchasing power and a drop in UK living standards. Weaker sterling means imports are more expensive, with rising prices being passed on to consumers. 
 
"The fall in the pound is good for exports some claim, but it must be remembered that around 50% of UK exports rely on imported components. These will become more expensive as the pound falls in value.
 
"A low pound is, of course, bad news for British holidaymakers, travellers abroad and the millions of British expats - with holidays and living/retirement overseas more expensive."

Green adds: "Furthermore, the Brexit deadlock continues which is causing the UK economy to haemorrhage investment, confidence and opportunity.

"Job-generating, tax-paying, wealth-creating businesses need certainty."

The deVere CEO concludes: "It's an abuse of the democratic system for the opposition to not allow a general election to take place to break the deadlock. 

"Many voters will believe that the reason why Jeremy Corbyn is pursuing this path is that despite the most chaotic political turmoil this country has faced in generations led by the Tories, he is still unlikely to win a general election."

"Mr Corbyn and others need to stop playing games.  The pound and the UK economy are losing their edge in a competitive global economy with the grinding Brexit politicking."

 

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