July 12th, 2018 had been a day that sparked what could become one of the toughest rounds of negotiations between the United Kingdom and the European Union. The British Government had published a 98-page white paper that describes the how the UK will want to see the future relationship with the EU.
In this material, we will discuss some key point in the document and also we will try to see what impact should be expected on financial markets and online trading, respectively.
A tense situation among high officials
The Theresa May white paper, which had already caused chaos in her cabinet, with the resignations of David Davis and Boris Johnson, is being viewed with skepticism by European counterparts. Also, according to express.co.uk, officials from the UK are being “disappointed” in the European counterparts, insisting that Britain is viewed “as a competitor and not as a partner.”
Key points from the white paper
The UK wants to keep the free trade area and ensure frictionless travel of goods. Nothing changed here since Britain wanted this from the start. However, on the free movement issue, things would not be good for the EU, since the UK wants to end European citizens freely traveling in Britain and live there with the same rights and its own residents.
A labor mobility scheme could be negotiated in order to allow business people and students to travel to Britain in a friendly way. This is expected to be one of the requirements that will create friction between both parties involved in the negotiation process.
Financial markets are expected to be under pressure, with the euro and sterling the main losers. Online trading activity could be biased towards the sell side, and all European assets could perform worse than expected.
Security issues had also been addressed in the white paper, Britain wanting a data exchange mechanism and access to programs and databases.
The new round of negotiations between the EU and the UK will begin in the fall and at the present time, procedures look like a lot of time will be needed.
The EU officials had been claiming several times that free trade should be accompanied by free movement and this could be one of the toughest points to agree on. There are rumors that the British government is also preparing for a “no deal scenario”, which had contributed to the rising uncertainty we saw in the last weeks.