No-trade deal Brexit? JPMorgan says about one third chance
Britain left the EU on Jan. 31 but talks have so far made little headway on agreeing a new trade deal with the bloc by the time a status-quo transition arrangement ends in December
JPMorgan said there was about a one third chance of a no-trade deal Brexit at the year end but that brinkmanship between Britain and the European Union over coming months would make it appear a much greater risk.
Britain left the EU on Jan. 31 but talks have so far made little headway on agreeing a new trade deal with the bloc by the time a status-quo transition arrangement ends in December.
"The chance of no-deal is about a third, but with brinkmanship part of the process it may appear higher than that before agreement is reached," JPMorgan analyst Malcolm Barr said in a research note to clients.
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EU chief Brexit negotiator Michel Barnier said on Wednesday that Britain must engage now with EU demands on guarantees of fair competition, fisheries and solving disputes in order to seal a deal on new trade ties by a "strict deadline" of end-October.
Barnier said London has so far not shown enough flexibility and creativity on these. But he believed a deal on a new relationship to replace decades of close-knit cooperation after Brexit from 2021 was still possible, if difficult.
Britain and the EU are due to hold talks in London on Sept. 7-11.
"It would be a surprise to us if enough progress were made to bring agreeing a Treaty by end October into view," JPMorgan's Barr said.
"The absence of that progress will generate pressure for interventions from UK and EU leaders; however, at this stage, we see little that suggests any major softening in the EU's position or unity around it," he said.
