Sterling and London stock markets were lower this morning on news that Brexit talks had faltered.
UK Government sources said talks in Brussels had hit a “real problem” over the thorny question of the border between the Irish Republic and Northern Ireland.
The news dashed the hopes that had built up of a breakthrough ahead of this week’s European Union summit.
Sterling fell against major currencies in early trading this morning. It lost 0.23% against theto €1.1353 and 0.11% against the to $1.3139.
High hopes are disappointed
Against theit was down 0.6% at 146.7050.
London’s blue-chipmade early gains but had turned tail by mid-morning, registering a 0.47% loss to 6,969.01, while the FTSE 250 index, which is more focused on domestic British firms than is the more international FTSE 100, made no early gains and was 1.01% lower by mid-morning at 18,781.5600.
Both indices have lost significant ground during the last three months. The FTSE 100 stood at 7,600.4502 on July 16 while on the same date the FTSE 250 was 20,800.5508.
Central to this are so-called backstop arrangements that would maintain frictionless trade across the Irish border while longer-term arrangements are put in place, allowing Northern Ireland to leave the European single market without facing the prospect of a “hard border” with its neighbours.
Prime Minister Theresa May has suggested the backstop should be achieved by keeping the whole of the UK effectively in the single market for a transitional period. But the EU is thought to be demanding that a second backstop, applying to Northern Ireland only and with no time limit, should be implemented.
“We must leave the EU together”
This would involve customs checks on goods moving between Northern Ireland and the rest of the UK and has been described as putting a “border” in the Irish Sea. This would be a hugely sensitive issue at any time, but is especially so given that Mrs May’s Government lacks a majority in the House of Commons and relies on the support of MPs representing the Democratic Unionist Party (DUP).
“One part of the UK cannot be left behind, bound to rules set in Brussels. The constitutional and economic consequences of such an approach would be catastrophic in the long run.”
EU leaders meet in Brussels on Wednesday, supposedly to approve a special summit in November to agree the final terms of a Brexit deal. But the latest impasse has led to suggestions that the November meeting may instead discuss arrangements should Britain leave the EU next year with no deal in place.
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