Boris Johnson lands Brexit withdrawal deal

After months of speculation and being in the dark, the Brexit outcome is finally known. Boris Johnson has confirmed that he has reached a Brexit withdrawal deal. The legal text around the decision has just arrived, as reported by the Financial Times.

Boris Johnson tweeted the following:

The UK and EU have been working on the outcome of the Brexit deal / no deal situation for quite some time. While the legal text has landed, it will need the approval of both EU and UK parliaments.

While Boris Johnson has landed the deal, it does not mean it will go through 100%. First, the deal has to go through the House of Commons, where the votes are far from guaranteed. Furthermore, the Democratic Unionist party has stated that it will not vote for the deal. If that happens, the deal agreement will break down.

Here is a breakdown of the deal reached and the details around it:

The new deal is similar to the one reached by Theresa May. The major change is the proposal for Northern Ireland.

  • The UK will abide by all EU rules until the 31.12.2020, and maybe even longer so that businesses can adapt
  • The “divorce bill” for the UK is estimated at GBP 39bn
  • The rights of all European citizens living in the UK and also UK citizens in the EU will be guaranteed

Main changes:

  • As opposed to the deal that was reached by Theresa May, Northern Ireland will be aligned to the single market of the European market
  • The “backstop” has been eliminated
  • After Brexit, Northern Ireland will be included in any potential future trade transactions and will remain in the UK’s customs territory
  • However, Northern Ireland will be an entry point in the customs zone of the EU. Tariffs will apply
  • The Northern Ireland Assembly will receive a vote every 4 years on how to change or not change the trading arrangements in place
  • This decision will be made on a simple majority basis instead of majority of nationalists and unionists.

For now, there are mixed opinions about the new deal reached. For instance, here is what John Goldie, FX Dealer at Argentex Group plc, had to say about the impact of Brexit on the sterling:

Sterling continued to soar as rumour turned into reality and the EU and UK government confirmed that a new Withdrawal Agreement had been achieved.

But wait, we’ve been here before. Boris has achieved what May couldn’t in getting the EU to amend the text of the agreement, but May’s team had achieved a deal herself previously. The issue was it couldn’t get through Parliament. On multiple occasions. The DUP statement said this morning that they would not support the deal and fresh after Juncker confirmed “where there’s a will there’s a deal” the DUP reconfirmed that their position was unchanged. Either Boris believes that he can convince them, or that he can do it without them – on either point I am yet to be convinced.

We are not yet at the denouement – but a Saturday sitting and Benn Act deadline feels like we are fast approaching the real climax of this story.

Overall, the expectation is that now Mr. Johnson will press the EU to remove the October 31st deadline, so that the deal is backed up sooner.

The parliament sitting is expected to take place on Saturday (Oct 19th). What is going to happen is either parliament gets an opportunity to pass the long-awaited Brexit deal and Britain will leave the EU on negotiated terms, or Mr. Johnson will have to get around the so called Benn Act. One of the two options is possible.

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