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Spring in London’s step ahead of key post-Brexit talks

10:44, 19 April 2021

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Spring in London’s step ahead of key post-Brexit talks

Sterling and stock markets started the week in upbeat form, following talks last week aimed at resolving issues with trade between Great Britain and Northern Ireland.

The blue-chip FTSE 100 index was 0.05% higher at 7,023.36, while the FTSE 250, more representative of domestic British business than the international FTSE 100, was 0.22% higher at 22,571.15.

This was part of a Europe-wide trend, with stock markets higher in Amsterdam, Frankfurt, Madrid and Paris.

Only alternative to international border

Meanwhile, the pound was 0.33% higher against the dollar, at $1.3862, and 0.21% higher against the euro, at €1.1565. It lost a tiny amount of ground against the yen, to 150.2100 yen, but the fall in value, of just 0.0060 yen, was so small that, in percentage terms, the sterling/yen exchange rate registered as “no change”.

Problems have arisen in trade with Northern Ireland because the province remains inside the European Union’s single market in terms of goods. This was said to be the only alternative to an international border inside Ireland, given the Irish Republic is a full EU member and Northern Ireland, as part of the UK, had left.

But this has given rise to other difficulties, given that it creates a new trade border down the Irish Sea. There have been hold-ups for cargos entering Northern Ireland from Great Britain, as the province remains subject to tough EU regulations on agricultural and food products.

On 15 April, Britain’s Brexit supremo Lord Frost met European Commission vice-president Maros Sefcovic, and both agreed to redouble efforts to find a solution to the problem. One possibility is that the whole of the UK would voluntarily adopt EU rules in these product areas, but Britain has rejected this, as it would mean keeping parts of the economy subject to EU rules.

Anger and rioting

In parallel with these talks is a legal action by Brussels against London after the latter extended a previously-agreed period of “light touch” checks on goods entering Northern Ireland without agreement from the EU. This action would go on as long as necessary, said Mr Sefcovic.

The partial severance of Northern Ireland for trade purposes from the rest of the UK has sparked anger in the Loyalist communities, those that wish to remain British, and has contributed to several nights of rioting.

Some say the problems were entirely predictable, but the BBC fact-check unit notes: “The main campaign literature published by the Leave and Remain campaigns on a UK-wide basis in 2016 didn't mention Northern Ireland at all.

“Leading figures on both sides made campaign visits to Northern Ireland, but its future status wasn't a big part of  the national conversation.”

However, once the UK had voted to leave the EU, it adds, it came into focus that the border between Northern Ireland and the Republic was now the land border between Britain and the EU.

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