Tusk’s visit to Downing Street
Hot on the high-heels of Mrs May`s speech in Florence last week, European Council President, Donald Tusk met Mrs May at Downing Street yesterday, 26th September, presumably to hear it from Mrs May herself. This was the second visit by Mr Tusk with Brexit on the agenda. The first visit didn`t go down too well as Mr Tusk reported back to Mrs Merkel with grave misgivings. This visit ended with conciliatory tones as Mr Tusk upon his exit from talks to say;
“This shows that the philosophy of having a cake and eating it, is finally at an end. At least I hope so. That’s good news”.
“But of course, no-one will ever tell me that Brexit is a good thing because as I have always said, in fact, Brexit is only about damage control.
“And I didn’t change my opinion. I feel now we will discuss our future relations with the UK once there is so-called sufficient progress.
“The two sides are working and we will work hard at it. But if you ask me and if today member states ask me, I would say there is no sufficient progress yet. But we will work on it.”
This visit gave Mrs May the perfect opportunity to send a clear message to EU member heads of state. Support her and her vision for the UK-European future relationship together with the idea of a transition period after negotiations are complete, or face the reality of the risk of having to deal with hard-Brexiteers, who will adhere to the idea of “no deal is better than a bad deal”. A hard Brexit would be the most likely outcome, where both the UK and Europe risk to go over the much-touted cliff edge.
Mrs May currently enjoys support from Tory party MP`s. Some reluctant supporters who are unafraid of a showdown with Europe and a cliff-edge scenario, some dedicated supporters, who like her are remainers at heart and open to a soft Brexit with some supporting her from the side-lines with Party unity and continuation of power beyond the next election in mind. Then there are a handful of cabinet ministers fighting their own corners for Mrs May`s job.
Under the circumstances, what has she got to lose by sending Mr Tusk away with the straight choice for Europe? Did she take the opportunity or will she fight both battles and almost certainly lose? One thing is likely. She will have told Europe via Mr Tusk that she is in full control of negotiations as things stand right now.
Mr Tusk might have left Downing St, the elephant in the room, with a flea in his ear.
The noises coming from Europe during the coming days may be more conciliatory than some of the rhetoric that immediately followed the Florence speech. That would continue to be bullish Sterling. Especially if the transition period is given more vocal support. IF the rhetoric changes for the worse, we can expect a sell-off of sorts. Not a meeting to under-estimate. No tea-party this one.
Key quotes from Mr Tusk via Reuters earlier on Tuesday:
- By being creative in the ways we approach these issues, we can find solutions that work both for the remaining (EU) 27 but also for the UK.
- We can also maintain cooperation and partnership between the UK and the EU
Following Donald Tusks visit to Downing St yesterday, the BBC reported that Mr Tusk said Theresa May`s speech in Florence was “realistic” Upon leaving No 10, he went on to say:
“This shows that the philosophy of having a cake and eating it, is finally at an end. At least I hope so. That’s good news.
“But of course, no-one will ever tell me that Brexit is a good thing because as I have always said, in fact, Brexit is only about damage control.
“And I didn’t change my opinion. I feel now we will discuss our future relations with the UK once there is so-called sufficient progress.
“The two sides are working and we will work hard at it. But if you ask me and if today member states ask me, I would say there is no sufficient progress yet. But we will work on it.”
Cable managed to rally and take back 50% (1.34613) of yesterday`s decline (1.35136 to 1.34090) and then pulled back as the following news hit the wires:
At the Labour Party Conference, Shadow Chancellor John McDonnell revealed that plans have been made by Labour to deal with a possible run on the Pound, should Labour go into government. Labour leader Jeremy Corbyn said it is “right to look at all these scenarios” after his shadow chancellor suggested that there could be a run on the pound if Labour went into government.
During an interview with BBCs Laura Kuenssberg, Mr Corbyn backed Mr McDonnell, telling her that his colleague was “making the point that you`ve got to look at all these things and all these scenarios” he went on to say “John is right to look at all these scenarios because if we’re going to move into government we need to know what we’re going to do… but also look at all the scenarios we might face,”
That story may have accounted for the slight pull-back in Cable after price hit 50% of yesterday`s move.
Extraordinary stuff from the Labour Party.
Today we see the USD story yet again. Not the bearish story of recent weeks. A relief rally? Correction? Or the start of a bull-run in the Dollar?
“The Brexit Review” is a series looking at the various latest news surrounding the UK leaving the EU. You can follow prior posts here
- Why is the Buck so strong? - May 2, 2018
- What have we on the board today? - April 18, 2018
- A time-tested strategy for account management - March 19, 2018
Excellent analysis Si. I’m glad I’ve got someone with their finger on the Brexit button 😉