EU Rejects Latest Fishing Proposal, Pound Keeps Steady

22 Dec 2020 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Fishing rights remains the last hurdle in Brexit negotiations
  • Markets open on a positive note

The European Union rejected Boris Johnson’s latest bid to reach a deal on the last sticking point, fisheries. On Monday the UK Prime Minister proposed a 30% reduction which was quickly rebuffed by the EU negotiators. The latest Brexit concession would mean that the value of the fish that EU boats catch in UK waters would be cut by 30% and retained by the UK.

This proposal was substantially lower than the initial one of 60% which was the only valid offer just a week ago. The bloc, however, is refusing to accept the 30% and is willing to go for a 25% cut. Even this is difficult to accept by countries like France and Denmark, who have been calling for a reduction of 18%.

The two sides remain apart and if there is no breakthrough in 9 days, the UK will leave the single market and customs union without a deal, essentially moving to trade relations under the World Trade Organization terms, or the Australia-style relationship. At present, there are few signs that a compromise will be made. Chief EU negotiator Michel Barnier said the Brexit talks are now at a “crucial moment” as both sides are working towards reaching a compromise in a “final push”. On Tuesday, Mr. Barnier updated EU ambassadors that the latest UK proposal on fisheries was “totally unacceptable”.

Fisheries, although not a strong stream of income, represents a key element of British sovereignty and in this light, the UK is fighting to gain control over its fishing waters, previously held by the EU. The financial implications in the context of a Brexit deal with current proposals would be equal to roughly €30-€40 million per year.

The Two Sides Prepared To Talk Over Christmas

Presently, the negotiations continue between Prime Minister Boris Johnson and European Commission President Ursula von der Leyen. The two sides are aiming to close a trade deal by Wednesday night. However, both teams are prepared to carry the talks over Christmas and negotiate until the end of the year, when Britain is set to leave the single market. Mr. Barnier said the sides are even prepared to bring the negotiations into the next year.

Apart from being at loggerheads over fishing rights, the UK and the EU are also trying to sort out the looming coronavirus crisis after a new strain was discovered last weekend. Prime Minister Boris Johnson stated on Monday that he spoke with French President Emmanuel Macron but the focus was the new variant of Covid-19 and border issues. On Tuesday, France announced the decision to reopen the previously closed UK border as traveling from the UK will remain limited and only allowed after presenting a negative test. This week, more than 40 countries imposed travel restrictions essentially isolating the UK.

Across Europe, markets opened in positive territory on Wednesday, only the UK’s FTSE100 is showing a modest loss of about 0.20%. A cautiously optimistic mood seems to be prevalent among the leading benchmark indexes today with the German DAX moderately higher by a bit over 0.50%, followed by the French CAC40, up roughly 0.30%.

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