[Asia Economy Reporter Jeong Hyunjin] After a tug-of-war, the United Kingdom and the European Union (EU) have agreed to resume future relationship negotiations, including a trade agreement. Market expectations for a deal have grown, leading to the British pound's largest increase in value since March.
According to Bloomberg and other sources on the 21st (local time), the chief negotiators from both sides, David Frost, the UK Prime Minister's Europe Adviser, and Michel Barnier, the EU's Chief Brexit Negotiator, spoke by phone in the afternoon and agreed to continue intensive discussions in London starting on the 22nd. Frost tweeted, "We have agreed on the basis for negotiations with the EU," adding, "Intensive negotiations will continue daily from tomorrow afternoon in London."
The UK and the EU had been engaged in a tug-of-war over resuming talks since the EU summit on the 15th-16th. With UK Prime Minister Boris Johnson taking a tough stance and pressuring the EU to end negotiations, concerns grew that talks might break down entirely. However, both sides appear to have decided to sit at the negotiating table, believing there is still a possibility of reaching an agreement.
The UK Prime Minister's Office stated in a separate release that while there is no guarantee of success, it has been made clear that an agreement is the best option. It also emphasized, "If no agreement is reached, the UK will choose the Australia model after the transition period ends and will prosper through it."
The news of the resumption of negotiations came after Barnier spoke at the European Parliament that day. He said, "If both sides are ready to work constructively and with a spirit of compromise, I believe an agreement is within our reach." He added, "If we move forward over the next few days based on legal documents," an agreement is possible, and "our door will always be open."
The UK and the EU agreed to complete negotiations on their future relationship, including a trade agreement, within the transition period set to end this year after Brexit (the UK's withdrawal from the EU) on January 31. With the resumption of talks, the chief negotiators from both sides will continue intensive negotiations, including over the weekend.
Following the news of the resumption of negotiations, the British pound's value rose the most since March. The pound's value against the dollar increased by 1.6% to $1.3149 compared to the previous day. Foreign media reported that this daily increase was the largest since late March when market volatility expanded due to the novel coronavirus (COVID-19).
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