Following Theresa May’s dinner with Jean-Claude Juncker in Brussels, we have a promise that both sides are committed to accelerating Brexit negotiations…except nobody actually believes that.
Apart from the “bear hug” that Juncker gave Britain’s Brexit Secretary, David Davis, as they went their separate ways, there is no evidence that relations are any more cordial, or that any tangible progress was made in breaking the deadlock.
Rather than no progress, however, Bloomberg is reporting that the UK government sees the potential for the negotiations to collapse after this week’s EU Summit. “U.K. Prime Minister Theresa May’s government fears Brexit talks will break down unless the European Union gives ground at a key summit this week, according to a person familiar with her team’s views. Without a clear sign that negotiations will progress to trade and transition arrangements by December at Thursday’s summit of EU leaders, the entire Brexit process will be in danger of collapse.”
Mrs May made a telephone call on Sunday to the one person, Merkel, who could have softened the EU’s stance ahead of the dinner. Consequently, we were not surprised to learn that now “senior British ministers are losing faith in the EU’s willingness to strike a deal, the person said.”
As we’ve said before, it still boils down to money and the EU is not shifting until the two sides can agree on a number.
The growing problem for Mrs May is that she now has little room to maneuver due to the weakness of her own position. The source in Mrs May’s team told Bloomberg “May took a political risk by promising to pay into the EU budget and settle the divorce bill in a speech in Florence, Italy, last month and now needs something in return for before she can make concessions.”
So…the stand-off continues, with the EU contingent staying confident that they have far more to gain at this point. “German Chancellor Angela Merkel and French President Emmanuel Macron are the two key obstacles to allowing talks to move on trade, according to the first official. Germany has a vested interest in delaying the progress in the Brexit talks because Frankfurt is trying to tempt companies away from London, the person said.”
You can throw in Paris, Amsterdam and Dublin as beneficiaries too…just as long as the deeply embedded structural problems in European banks don’t suddenly flare up again.
This post originally appeared on Zero Hedge