UK: PM May’s vision for the Brexit transitional period awaited - Rabobank

Analysts at Rabobank point out that UK PM May is due to stand up in parliament at 3:30 GMT this afternoon and pitch her vision for the Brexit transitional period.

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“In doing so she risks stoking divisions within her own cabinet and triggering a row with the EU.  May will reportedly state that she wants the UK to leave the EU’s single market and customs union while retaining many of the benefits.  However, it is reported that May will demand the right to start registering new arrivals from the EU during the transitional phase and to begin negotiating trade deals with non EU members.”

“Both practices would be denied for current EU members.  While negotiating with the EU, May must also attempt to prevent an explosion within her cabinet between members such as Rudd and Hammond who wish to keep a close relationship with the EU and those such as Johnson and Rees-Mogg who want to move away from the EU to avoid the UK becoming a “vassal state”.  EUR/GBP has been trading a range since the start of the month waiting for impetus from the start of the UK/EU trade talks.  The release of the third estimate of UK Q3 GDP data later in the week is expected to confirm a pace of growth of 0.4% q/q, half of that recorded by Germany.”