LONDON—Britain’s new Prime Minister Boris Johnson is refusing to meet with European Union leaders unless they renegotiate a Brexit divorce deal, beginning a standoff with the bloc that triggered the pound to fall to its lowest level against the euro in almost two years on Monday.
Since entering Downing Street last week, Mr. Johnson has upped the rhetoric around leaving the EU without a deal to smooth the way on Oct. 31, stating that no deal was the default position unless a previously negotiated divorce agreement is significantly altered.
On Monday, his spokeswoman said that Mr. Johnson would only begin face-to-face meetings with EU leaders if they agreed to change key aspects to the deal, something the other 27 member states have so far refused to do.
On a visit to Scotland on Monday, Mr. Johnson said that there was “scope” for a new deal but only if the EU cooperated. The pound fell more than 1% against the dollar amid rising worries that a no-deal break with the EU would damage the British economy.
It is unclear whether Mr. Johnson’s tough talk is an elaborate bluff or not. Mr. Johnson has previously said the EU must believe he is prepared to go through with an economically damaging no-deal if he is to extract better divorce terms.
“If it is a bluff, he is playing it in a really odd manner,” says Sara Hobolt, political-science professor at the London School of Economics. “Because it is not at all clear what the EU has to compromise on.”
So far, Mr. Johnson has made clear what he doesn’t like about the Brexit deal, but hasn’t set out in detail what he would prefer instead, Ms. Hobolt adds. Meanwhile, the ruling Conservative Party doesn’t have a majority in Parliament, so the EU is wary to hand concessions to Mr. Johnson only to see Parliament again reject a withdrawal deal.
Mr. Johnson’s government is preparing an ad campaign to urge businesses to prepare for the prospect of a sudden end to over four decades of seamless trading with the EU. A specially created committee of senior ministers to ensure the government is ready for a no-deal Brexit is holding its first meeting on Monday.
Over the past few days, Mr. Johnson has talked to EU leaders by phone laying out his position. Notably, he hasn’t so far called Irish Prime Minister Leo Varadkar, whose country would, along with Britain, be most impacted by a disorderly Brexit due to its tight trading ties to Britain. The U.K.’s only land border with the EU is on the island of Ireland.
Foreign Minister Dominic Raab on Monday said the EU was being “stubborn” on negotiations.
Sterling was trading at its lowest level against the euro since September 2017 on Monday, with £1 worth €1.10 euros.
“Key for when the pound has moved lower [in recent days] has been a general election becoming more likely, and the chance of a no-deal Brexit ticking up,” said Fritz Louw of MUFG Bank Ltd.
Mr. Johnson is also embroiled in dealing with another union: the United Kingdom. In his first full week in power Mr. Johnson is visiting Wales, Scotland and Northern Ireland, to reassure voters that an abrupt Brexit won’t damage the bonds that hold the United Kingdom together.
Scottish voters overwhelmingly rejected the idea of Britain leaving the EU during the 2016 referendum. The Scottish National Party is using Brexit as a pretext for holding a second independence referendum, saying that the country doesn’t want to leave the EU. Northern Ireland, meanwhile, could bear the brunt of the economic disruption if the U.K. quits the bloc without a divorce deal. That could potentially fuel a longer-term shift toward reunification with the Republic of Ireland, analysts say. Mr. Johnson, who has given himself the title of “minister of the union”, said Monday that the whole of the U.K. would benefit from sticking together.
For Mr. Johnson, Scotland represents an electoral problem. Currently, the ruling Conservative Party has 13 seats in Scotland. However, if Mr. Johnson pushes ahead with a no-deal departure from the EU, those seats could quickly evaporate. The leader of the Scottish Conservatives Ruth Davidson on Sunday warned that while she supported Mr. Johnson, should couldn’t back his hard-line Brexit stance. So far, the British government has rejected demands from the Scottish National Party to hold another vote on whether Scotland should quit the U.K. In 2014, Scotland voted to remain part of the U.K. during a referendum.
In Northern Ireland, the situation is particularly sensitive. A key objective for both the U.K. and the EU is avoiding checks on the border between Northern Ireland, which is in the U.K., and the Republic of Ireland which is in the EU. A provision was included in the divorce deal to ensure that Britain remains in a customs union with the EU until such a trade deal can be signed to keep goods flowing seamlessly across that border.
Mr. Johnson says that provision is unacceptable because the U.K. couldn’t unilaterally extricate itself from the arrangement. “It’s dead, it’s got to go,” the prime minister said Monday referring to the provision known as the Irish backstop. For Dublin and Brussels, the backstop is key to maintaining peace and security on the island of Ireland, where the border has been a flashpoint of political violence in the past.
The Good Friday Agreement, which ended decades of violence between Irish nationalists and pro-British unionists, states that a referendum on uniting Northern Ireland with the Republic of Ireland will be held if there is public support for such a move. Currently, the British government says there isn’t public support for a referendum of that kind.
“People who you might describe as moderate nationalists, or moderate Catholics, who are more-or-less happy with the status-quo will look toward a united Ireland,” said Irish leader Mr. Varadkar. ”And I think increasingly you see liberal Protestants and unionists who will start to ask where they feel more at home."
—Anna Isaac and Paul Hannon in London contributed to this article.
Write to Max Colchester at max.colchester@wsj.com
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https://www.wsj.com/articles/boris-johnson-ramps-up-no-deal-brexit-rhetoric-causing-pound-to-fall-11564411652
2019-07-29 15:11:00Z
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