European Union negotiator: Brexit transition by end of 2020

Brexit Michel Barnier and Theresa May

AFP EPABrexit latest Theresa May dismissed Michel Barnier's warning

The European Commission said Wednesday that it wants a post-Brexit transition period, during which Britain must continue to obey EU rules, to finish at the end of 2020.

Chief EU Brexit negotiator Michel Barnier said that "all EU policies will still apply" during the transition to a new relationship between London and Brussels after Britain leaves the bloc in March 2019.

Britain will need a transition after Brexit that will avoid businesses having to adjust to new rules and regulations twice.

The transition period would amount to three months less than what Britain initially sought but the date dovetails with the beginning of a new multiannual budget which would leave Britain totally out of it.

"Encouraging EU banks to continue to operate in the United Kingdom will help preserve financial stability for the United Kingdom and the EU and will help defend London's position as an open global financial centre", said Miles Celic, head of the lobbying group TheCityUK.

"I think sterling is still a long-term short", said ACLS Global strategist Marshall Gittler.

Michel Barnier
GETTYBarnier said there was “no place” for financial services in any post Brexit trade deal

Downing Street has said on Tuesday the PM will demand a "significantly more ambitious" deal than what the European Union has in place with Canada.

Mr Barnier also appeared to indicate that Spain would have a veto on any transitional arrangements covering Gibraltar, saying decisions on the issue would be "made for the 27, unanimously, by consensus".

But Mrs May told Prime Minister's Questions in the House of Commons: "We are not going to exclude Gibraltar from our negotiations from either the implementation period or the future agreement".

Mr Barnier indicated he is working to a timetable of reaching a political agreement on the future UK/EU relationship by October 2018, in time for it to be published alongside a new treaty containing the terms of agreement on withdrawal and transition.

On the broader question of what kind of trade deal will be possible, Mr Barnier restated his view that the PM's Brexit plan - which includes leaving the bloc's single market and customs union - means Brussels can only offer an agreement similar to ones negotiated with Canada, South Korea and Japan.

With thin trading and little economic data to shift interest elsewhere, focus on the next round of divorce negotiations between Britain and the European Union left the pound unable to break outside of the ranges it has traded in over the past two weeks despite some progress in Brexit talks.

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