Sterling moved up significantly yesterday on Barnier apparently saying a deal could be done in 6-8 weeks. The BBC (HERE) report, "The EU's chief negotiator said it was 'realistic' to expect an agreement on the terms of the UK's exit from the EU by early November at the latest". This was taken to mean he was virtually announcing a breakthrough in the talks.
But it could have meant anything. Let's not forget there are two deals, firstly the Withdrawal agreement and then a political declaration on the future relationship, which will be non binding with the details on trade then being negotiated over the next 21 months. Is he talking about the WA or the future relationship? Or both?
Does he know something or is he just saying it's possible - if we make more concessions? And have we indicated we're preparing to make concessions? If so will they get through the HoC? Meanwhile the government are refusing to say if they've taken legal advice on holding a second referendum (HERE).
The EU know how fractious it is in Westminster and the problem Theresa May will have getting any agreement accepted. The ERG won't be happy with the Chequers plan even if no more concessions are made and it's unlikely to get the support of the Labour party.
Later Barnier's actual words emerged and according to The Guardian and others (HERE), this is what he actually said:
"I think that if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within 6 or 8 weeks".
So, I don't believe he is saying quite what the markets think he was saying. It's only the Withdrawal Agreement and he is only saying it's realistic to expect this to be concluded by then, not that it will be. For this to happen we will need to agree a legally watertight backstop for the Irish border and something on governance of the treaty itself. Last week at a press conference Barnier was quoted as saying that it wasn't more time that was needed but "political decisions" and for them we are still waiting.
