Brexit talks started in a less friendly atmosphere - Rabobank

Analysts at Rabobank explain that another round of Brexit talks started in a less friendly atmosphere as prominent EU officials strongly criticised the UK for being insufficiently prepared.

Key Quotes

“I’ve read all the position papers produced by Her Majesty’s government and none of them is satisfactory”, European Commission President Jean-Claude Juncker said on Tuesday. “There is still an enormous amount of issues that remain to be settled”, he warned. Ahead of his meeting with UK Brexit Secretary David Davis, the EU’s chief negotiator Michel Barnier expressed concerns about the slow progress of Brexit talks stressing that “we must start negotiating seriously.” The EU remains adamant that such issues as the Brexit bill, citizen rights and the Irish border should be discussed first before moving to the future trading relationship between the UK and the EU. The UK argues that the EU should show more flexible approach to negotiations.”

“Given that major progress is unlikely, prevailing uncertainty about Brexit will continue to weigh on UK economic activity as reflected in the latest housing data published by Nationwide. The pace of gains in UK house prices decelerated to 2.1% y/y in August from 2.9% y/y in July. This was much lower than the consensus expectation of 2.5% y/y. Nationwide still expects around 2% increase in house prices this year as a chronic shortage of properties should prevent a bigger correction. It is also worth pointing out that in trade-weighted terms sterling has recently weakened close to the level that prompted comments from Governor Carney that the BoE is not “indifferent” to the exchange rate.”