No-deal Brexit risk is back as Barnier warns talks may fail

Bloomberg

The prospect of a no-deal Brexit is real again. European Union chief negotiator Michel Barnier is ramping up his rhetoric and officials in private worry that the risk of a messy divorce, which had receded at the end of last year, is now back.
At least twice in the last week Barnier has made public warnings that talks could still fail, including a speech to bankers and finance lobbyists in which he told them to prepare for the worst. “No one should underestimate the risk of disagreement,” he said.
And in private too, there’s a sense that the reassurance provided by two preliminary agreements in December and then March is fading, and no deal is being considered as a possible outcome again, according to one person involved in the negotiations.
Talks are making slow progress and the Irish border issue remains intractable. Most of the talking is still about separation issues rather than the future relationship that the UK says it’s keen to pin down. EU officials say not much has happened since March.
It’s a change from the early part of this year when many officials became more optimistic.
Striking an interim deal in December and provisionally agreeing on a transition period in March reduced the chances of the overall agreement failing, they thought. Prime Minister Theresa May dropped her mantra that no agreement is better than a bad one and in March called for an end to threats of walking out.
With the transition agreed in principle, there was now more to lose from a breakdown.
Brexit Secretary David Davis continues to say in public that the chances of failure are very small.
But adding to the uncertainty is that May’s grip on power is not as strong as it seemed earlier this year. She’s under pressure from both euroskeptics and pro-EU rebels, and also tarnished by an immigration scandal that has cost May her trusted home secretary Amber Rudd. If she goes, the chances of a messy divorce probably increase, depending on who replaces her.
Fears of a crisis have contributed to the pressure on the pound, which has fallen 1 percent against the dollar this week. The currency is down more than 5 percent since April 17, when it posted its highest level since the Brexit referendum in June 2016.
Barnier visited the Irish border this week, and again warned of the risk that talks could fall apart. He has also made clear his view that the ball is now in the UK’s court.
The EU sees no reason to budge and says it’s for the UK to produce ideas that work, not only when it comes to the future relationship but also the divorce issues and the question of the Irish border.

Onus on Britain
“It is now up to the UK to come up with its vision for the future, which should confirm the UK’s red lines or adapt them. This is true for the future relationship. It is also true for issues of the withdrawal such as Ireland and Northern Ireland, where we have done our share of the work,” he said in Hannover on April 23, in remarks that were noted by officials on both sides.

Europe fires starting gun for fight over next EU spending plan
Bloomberg

The European Union moved to reduce farm subsidies in a bid to help fill a Brexit-induced budget hole, triggering a year or more of political battles over the bloc’s future spending programme.
The European Commission proposed a roughly five percent cut in EU agricultural expenditure as of 2021 to make room for bigger outlays on security. The commission recommended a similar lowering of European regional-development aid and tying it to member countries’ respect for the rule of law as the bloc struggles to check a Polish political assault on domestic judicial independence.
The measures form the centrepiece of the proposed 2021-2027 EU budget unveiled by the commission, the bloc’s executive arm.