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How much will the UK have to pay to secure a trade deal?


After another round of Brexit negotiations (a half round anyway) – there seems to have been a lot of ‘technical’ progress but nothing tangible.  The Observer notes that “Nearly nine months after the triggering of article 50, the EU bloc remains united behind its tougher-than-expected negotiating position“. Now the EU has given the UK a 2 week time-frame to come up the money – this will force the UK in honouring current and future obligations and hence driving the cost to £60bn+

There will not be trade talks until there is an agreement on the exit bill. The UK negotiating team were clear with the EU that they will not have a number or formula until we get onto the next stage. David Davis says “they accepted that”. The 27 EU countries will make a decision in December whether to move onto trade negotiations or not. [embed]https://youtu.be/fUDRYLla6rU?t=259[/embed] This is taking 40 years of law…this is most complex negotiation probably in history. It is unreasonable to expect absolute certainty on what the outcome will be. Uncertainty is baked into the entire process. No deal is more of a possibility than ever before. The UK will be ready if there is no deal, they are not expecting it but are planning for it. There could be a bare bones deal…that will allow aircraft to fly etc... The UK government will keep the show on the road.

Michel Barnier spoke of the complexity of the negotiations at his press conference. From a legal point of view there are about 1000 international agreements that the UK will have to leave, 1000s of legislative acts. 6 rounds of negotiations to get to this point is hardly anything. The EU are looking for sincere and real progress.

UK is 4 times more exposed that the EU
Why is the EU taking such a tough position on the divorce bill? Simply put – because the UK has more to lose from a hard Brexit than the EU has.

Who is more exposed by a no deal Brexit? Professor Philip McCann from the Sheffield Management School recently presented at the Brexit & Trade forum in London. The Brexit risk to the EU is about 2.5% of GDP – the risk to the UK is 12.2% GDP. The UK is over 4 times more exposed than the UK.

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