You are here

Britain, EU reach Brexit draft deal, all eyes on UK parliament vote

BT_20191018_NBDEAL8MD3_3924542.jpg
Mr Juncker (right) and Mr Johnson attend a news conference after agreeing on the Brexit draft deal, at the sidelines of the European Union leaders summit in Brussels on Thursday. UK lawmakers now have to vote on it.

London

AFTER more than 1,200 days since the Brexit referendum, British Prime Minister Boris Johnson has achieved what was thought impossible and has forged a new deal with the European Union (EU).

Sterling surged against the US dollar, almost touching 1.30 before slipping back to just under 1.29. Since the Brexit gloom only eight days ago, the currency has soared by almost 6 per cent. The pound has also been strong against the euro, yen and Singapore dollar while shares of companies that mainly rely on the home market are well up. Lloyds Bank, for example, has risen by 24 per cent since its recent low.

Sterling and shares fell back after the Northern Irish Democratic Unionist Party (DUP) continued to refuse to back the agreement. The DUP's 10 MPs are key to helping Mr Johnson win the Brexit deal vote in parliament. The hard Brexiteers, notably members of the European Research Group, however, indicated that they could support the deal but that they first needed to examine the text.

sentifi.com

Market voices on:

The threat of opposition is still expected to come from the majority of Labour MPs, Liberal Democrats, Scottish Nationalists, Welsh and Green parties and independents. All MPs, however, are conscious that if they do not follow the will of the majority in the 2016 referendum, they could be punished in the coming general election.

European Commission president Jean-Claude Juncker said Britain and the EU should endorse it. Both sides had found a "legally operative solution" to avoid a hard border in Ireland, EU negotiator Michel Barnier said in a press conference.

"We have reached an agreement that is fair and reasonable and corresponds to our principles," Mr Barnier said but he also urged caution as the deal must still pass through the UK parliament which had rejected former prime minister Theresa May's Brexit deal three times before.

Mr Barnier added that the Brexit process had been a "school of patience" and he hopes that from Nov 1, the EU can start working on a new partnership with the UK.

"When discussing Northern Ireland, we discuss the economy, technical matters and goods but for me since Day 1 three years ago, what really matters is people. The people of Northern Ireland and Ireland. What really matters is peace," he said.

The deal included a legally-binding solution to avoid a hard Irish border, preserve the whole-island economy and protect the integrity of the single market, Mr Barnier said. "It was extremely important to Prime Minister Johnson that the whole of Northern Ireland remains in the UK customs territory."

The new arrangements thus mean Northern Ireland is legally in the UK's customs territory, but would apply the EU's rules and procedures on tariffs. Northern Ireland would also be aligned with the rules of the single market for industrial goods and agri-food products. That would mean both regulatory and customs checks and controls on the Irish Sea for goods going from Britain to Northern Ireland. However, the extent of the controls would be reduced thanks to a series of tariff exemptions.There would be an automatic exemption for personal goods and possessions carried by those travelling back and forth between Northern Ireland and Britain, or, for example, if an individual was moving house.

There would also be a broader category of goods and tradeable products that could be exempted from tariffs and controls if there was no risk whatsoever of such goods entering the EU's single market across the land border. Those categories of goods would be decided on in the future by the Joint Committee of EU and UK officials by consensus.

The deal manages to resolve VAT sales tax rates to avoid distortion of competition in the EU's single market and maintain the UK's fiscal requirements.

Mr Johnson and Irish Prime Minister Leo Varadkar also want to ensure long-term democratic support for the UK. Four years after entering the deal, the elected members of Northern Ireland will be able to decide by simple majority whether to continue applying relevant EU regulations. This is no longer to be replaced by a subsequent agreement between the EU and the UK.