Crucial milestone in talks
Sterling rises as UK and EU agree draft Brexit deal
Theresa May will hold talks with Cabinet ministers tonight
Sterling rose against the dollar and the euro as UK and EU officials agreed the draft text of a Brexit agreement in a significant breakthrough for the talks.
The document has been agreed at a technical level by officials from both sides and Prime Minister Theresa May has been briefing to Cabinet ministers individually ahead of a Cabinet meeting on Wednesday.
It is understood that a final breakthrough came with an agreement on the future of the border between Northern Ireland and the Republic of Ireland.
It sets out a proposal for the UK to remain under EU customs union rules until a trade deal between London and Brussels can guarantee the free flow of goods across the Irish border, but an ‘exit mechanism’ from the customs backstop is not expected to include a firm end date or give the UK the right to walk away unilaterally.
However, the draft Withdrawal Agreement was immediately condemned by Mrs May’s critics on her own backbenches, as well as her allies in the Democratic Unionist Party, adding to growing fears that the Commons could reject the deal.
Jacob Rees-Mogg, the leader of the pro-Brexit European Research Group of Tory backbenchers, described the draft as “a failure of the government’s negotiating position and a failure to deliver on Brexit”.
Former Foreign Secretary Boris Johnson, who resigned over the Chequers plan, dismissed the breakthrough as “vassal state stuff” and claimed it “failed to protect our precious Union”.
He said: “For the first time since partition, Dublin will have more say over aspects of government in Northern Ireland than London,” the former foreign secretary added. “Am I going to vote against it? Yes.”
Sterling leapt 1.4% to trade at $1.3036 in afternoon trading, while against the euro it jumped to a near seven-month high of €1.1542.
Markets will remain on tenterhooks throughout the day as they await further developments from the Cabinet meeting at 2pm on Wednesday.
Labour leader Jeremy Corbyn said:“We will look at the details of what has been agreed when they are available. But from what we know of the shambolic handling of these negotiations, this is unlikely to be a good deal for the country.
“Labour has been clear from the beginning that we need a deal to support jobs and the economy – and that guarantees standards and protections. If this deal doesn’t meet our six tests and work for the whole country, then we will vote against it.”