With just 34 days left to the end of the Brexit transition period deadline, the EU and the UK are racing against the clock to reach an agreement. With the EU stating their readiness to get “creative”, it does come with the disclaimer label of “not under any circumstance”. Read today’s bulletin to find out more on the latest negotiation developments. Additionally, the EU markets watchdog, ESMA, has stated that most financial derivatives will no longer be able to trade on UK venues once the Brexit transition period ends. Readers can also view the details on Microfinance Ireland’s new Brexit Business Loan for small businesses.
Time runs short as EU and UK race against the clock to meet the Brexit deadline
The EU’s chief Brexit negotiator, Michel Barnier, is set to travel to London this evening as talks with his UK counterpart David Frost are set to resume following a COVID-19 scare. With just over a month left to go before the end of the transition period, Mr Barnier has said that the "same significant divergences persist". The main issues that need to be resolved remain to be governance, the level playing field, and fisheries.
It has also been reported that Mr Barnier will be holding a meeting of fisheries ministers from eight coastal states, including Ireland, later today via video conference. With fisheries being one of three main areas of divergence in the negotiations, this meeting comes at a critical juncture in the Brexit trade talks.
“There is a clear difference between being a full member of the Union and being just a valued partner” …
Speaking at the European Parliament Plenary session, Commission President Ursula Von der Leyen has stressed that the next few days of the negotiations are going to be decisive, and that while the EU is well prepared for a no-deal scenario, an agreement would be preferred. She has also repeated that the EU are open to being creative to reach an agreement, but it needs to be understood that there is a “clear difference between being a full member of the Union and being just a valued partner”.
“Get ready now”
While the EU and UK battle it out to reach an agreement on the Brexit front, Irish Government ministers have intensified calls for businesses that have not yet prepared for Brexit to take immediate action. With expected delays and supply chain disruption in the agri-food sector dominating the latest headlines, Minister for Agriculture Charlie McConalogue has expressed concern that a significant number of agri-food, forestry, and fisheries firms who have traded with the UK in the past two years were still not ready for the transition period deadline, and the new customs arrangements coming into effect on 1 January 2021.
Mr McConalogue said that these companies had not yet taken the initial step in being prepared for Brexit by registering for an Economic Operators’ Registration and Identification (EORI) number. Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar is urging businesses to use available Government supports to mitigate the disruption Brexit will bring to the trading landscape, in addition to the adverse impact of the COVID-19 pandemic.
Trading conditions between the UK and EU will change from 1 January 2021. To support this call for readiness, the Institute have outlined the top 10 things to do to prepare right now, whether you trade in goods, and/or services.
EU market watchdog confines derivative trading for EU firms to within the Union
The EU markets watchdog has stated that most financial derivatives will no longer be able to trade on UK venues once the Brexit transition period ends.
The European Securities and Markets Authority (“ESMA”) have said in a statement today that firms will be obliged to continue using EU-recognised venues under a rule known as the “derivatives* trading obligation”. Under the rules of the “derivatives trading obligation”, derivatives covered under this requirement must be traded on venues within the EU or in third-country venues that have been granted equivalence. UK trading platforms will not have that recognition when Brexit takes effect at the end of the year.
“At this point in time, ESMA does not consider that a change of its approach is warranted,” it said. The UK will have a similar ban on EU27 venues as of 1 January 2021 but has called for mutual recognition of the equivalence of each other’s rules in order to avoid a crucial part of the cross-border financial market becoming unfeasible when the Brexit transition period expires on 31 December 2020.
*A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets. The most common examples for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes.
New Brexit loan scheme launched to support small businesses
Microfinance Ireland has launched the Brexit Business Loan in order to support small businesses through the current Brexit challenges and protect job creation and sustainment in Ireland. These loans may be used to acquire short-term working capital and/or make required business changes as a result of Brexit.
Loans for between €5,000 and €25,000 will be available to companies whose turnover has dropped or is likely to drop by 15 percent or more because of Brexit. Firms with a short term cashflow need due to Brexit will also be able to apply for the loans, which will be available for between six months and three years.
Applicants can also use the Brexit Loan Calculator to calculate the monthly repayments.
Brexit Bites
- Danish logistics company, DFDS, has launched a new direct ferry service between Rosslare Europort in Ireland, and Dunkirk in Northern France, giving Ireland landbridge-free access to mainland Europe.
- GOV.UK – Sign up for webinars or watch pre-recorded webinars about the new rules on trading with the EU from 1 January 2021.