UK, EU clinch new Brexit deal

Negotiators from the UK and EU have finally reached a draft Brexit deal in the eleventh hour of talks. However, there are serious doubts that the agreement would be approved by U.K. lawmakers back in Westminster.

Sterling inched up on news after the UK made concessions over the Irish border, an issue that had proven to be the biggest obstacle to a deal up to that point. The pound was 0.8 percent higher against the dollar, at $1.2929, reaching a five-month high.

UK Prime Minister Boris Johnson said “we have a great new Brexit deal” via Twitter. He called on British lawmakers to back the deal when it’s put before Parliament on Saturday.

Meanwhile, European Commission President Jean-Claude Juncker said the deal was a “fair and balanced” one.

Discussions to hammer out a “Withdrawal Agreement” — that will now be put before EU leaders at their summit on Thursday and Friday, and then UK lawmakers at the weekend — had continued late into the night Tuesday and into Wednesday. The EU Parliament will also have to ratify the deal at an, as yet, unspecified date.

Speaking after the deal was announced, Michel Barnier, the EU’s chief Brexit negotiator, said the deal was the result of intense work from both negotiating teams. “We have delivered together,” he said.

Giving further details on the deal, Barnier said that Northern Ireland will remain part of the UK’s customs territory and would be the entry point into the EU’s single market. He said there would be no regulatory or customs checks at the border between the Republic of Ireland and Northern Ireland (a part of the UK) — removing a factor that had been a key concern for both sides. He added that Northern Ireland would remain aligned to some EU rules, notably related to goods.

The deal also covers the protection of citizens’ rights and a transition period which will last until the end of 2020. Barnier also iterated that the EU and UK would work toward an “ambitious free trade deal with zero tariffs and quotas.”

Deal already in doubt

UK Prime Minister Boris Johnson is legally bound to request an extension to the current Brexit departure date of October 31 if no deal is reached, or rejected, by October 19. Whether the deal will be approved in Westminster is in doubt, however, with the future status of Northern Ireland still a sticking point for some.

A key ally of the government, the Northern Irish Democratic Unionist Party (DUP), has already responded by saying that it cannot support the deal.

The UK government, which does not have a majority in the British Parliament, needs the DUP’s support (and votes) if it is to have a chance to get a deal over the line when (and if) Parliament votes on Saturday to approve any deal.

The DUP said in a statement earlier Thursday that it’s unhappy with proposed customs and consent arrangements (designed to give Northern Ireland a say over its relationship with the EU post-Brexit) within the proposals. The DUP has repeatedly opposed any plans that would see it treated differently from the UK after Brexit.

While details of the new deal remain scant, the  UK opposition Labour party said in a statement that “from what we know, it seems the Prime Minister has negotiated an even worse deal than Theresa May’s, which was overwhelmingly rejected.”

British MPs had rejected a Brexit deal arrived at by previous Prime Minister Theresa May three times because of objections to the Irish “backstop” issue. This was designed to prevent a hard border on the island of Ireland if the UK and EU can’t agree a trade deal in a post-Brexit transition period.

Source: CNBC