Pound rises as Michel Barnier plans to offer UK an unprecedented third country deal
The pound surged this afternoon after the EU's chief negotiator Michel Barnier appeared to offer a breakthrough on Brexit, telling reporters the UK would receive an unprecedented deal for a third country.
Sterling climbed more than one per cent higher on the news, breaking the $1.30 mark for the first time in three weeks. Meanwhile the yield on UK 10-year government bonds rose five basis points to 1.51 per cent.
The pound also rose 0.97 per cent against the euro, at €1.1116.
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“We are prepared to offer Britain a partnership such as there never has been with any other third country,” Barnier told reporters in Berlin on Wednesday after a meeting with German foreign minister Heiko Maas.
He noted that that could include economic as well as foreign and security policy ties.
But Barnier reiterated his ruling out of any cherry picking.
“We respect Britain’s red lines scrupulously. In return, they must respect what we are,” he said. “Single market means single market … There is no single market a la carte.”
His comments came after a Bloomberg article suggested that officials on both sides were no longer expecting October's European Council to result in a significant breakthrough in the talks, instead looking to the emergency November summit that is being shoe-horned in as a more likely date.
Brexit secretary Dominic Raab, who travels to Brussels on Thursday for a meeting with Barnier on Friday, appeared before the Lords' European Union select committee this afternoon, reiterating the government's view that a deal was still possible.
He told peers that member states had been greeting the UK's Brexit white paper, based on the Chequers agreement, as "an interesting set of substantive proposals", which had "a reasonably constructive landing".
But he noted it had not been without compromises being made in Westminster – pointing to the resignation of his predecessor David Davis – and stressed "some of that pragmatism needs to be matched on the other side".
He reaffirmed the government's commitment to the Irish backstop, despite admitting no solution had yet been found.
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Raab also appeared to confirm that October was no longer the deadline for a deal, telling Lords of "the possibility it may creep over that" month.
"I am aiming, we are aiming, for the October Council – but there is some measure of leeway," he added.