Merkel Rejects Parallel Talks

In their letter to the EU, the UK requested parallel discussions: one for the “divorce bill,” and another for the go forward agreement. Per Sky News, Angela Merkel has already shut down that bit of wishful thinking. With that, the 18-month window to negotiate a new deal with the EU (that’s already likely down to around 16 months) may have just gotten a lot shorter.

The EU essentially holds all the cards here. The UK is willingly peeling off from the union, and would essentially be left to come back to the table begging for a deal if they got to the end of the Article 50 negotiating window without an agreement. The WTO option, and the balance of trade, are both problematic for the UK as they send far more goods (in % of GDP) to the EU than the EU sends to them, so it’s probably a good time to set the blustering and posturing aside, and come to the table with an honest intent to move fast and light in seeking a reasonable settlement. Leashes need to be found for the Tory hardliners that have been trumpeting about walking away without paying any sort of exit bill as any savings they realized in the short-term would likely be lost in multiples going forward.

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