Pound Soars as London and Brussels Head to the Wire

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Pound, dollar, October 2019

The British pound has jumped 4% against the euro and the dollar amidst much speculation of a potential deal between UK and the European Union.

An historic week is now to begin that culminates on Saturday when a million people are expected to march in support of staying in the union.

The queen is to give an irrelevant speech tomorrow with all eyes more on the EU ambassadors who are to meet.

Merkel and Macron are to dine with EU and UK currently in what they call “the tunnel,” a short period of intense secret negotiations with the aim of ironing out a deal.

Thursday opens the EU summit of political heads of state, with this to continue on Friday.

Saturday meets parliament. Boris Johnson, the Prime Minister, will lay out the deal if there is one, with the elected to vote on it, while millions may be outside in a most historic day.

Megaphone diplomacy has 10x upped its gear. All players have taken to the papers or TV as negotiations are in full swing.

Some have not been diplomatic at all, especially loyalists in Northern Ireland, yet much may be more about influencing the negotiations.

What’s the Deal?

What paper will be waved remains to be seen, but the probable end result is a special deal on Northern Ireland which will likely remain in the UK customs union with checks probably to be made at ports.

Blockchain technology may be used to facilitate these checks with Johnson stating “all customs processes needed to ensure compliance with UK and EU customs regimes should take place on a decentralized basis, with paperwork conducted electronically.”

Data entered would automatically be shared with EU customs in an immutable way or in a way that can easily be seen if the data has been changed by one party. That could allow for UK to collect tariffs on behalf of EU in a semi-trustless way, thus removing the need for a border.

Northern Ireland, moreover, may well have the right to a referendum to leave these arrangements or some other exit clause.

On goods there might be regulatory alignment, with the probable hope here being that a free trade agreement might make all this unnecessary.

A compromise may well be reached, and if it does EU and UK would remain very close as the above arrangement would create a special relationship of sorts.

UK would be out, economically and politically, from the European Union, but because of the special arrangement it would still be sort of integrated.

There’s no real “deal,” however. This is more an agreement of how Britain can exit. What its relationship will be with the European Union has not even begun being discussed.

Such discussions would take place during a two years transitionary period when they enter trade negotiations, in addition to UK negotiating its own trade agreements with USA and other.

What Might Go Down?

Any potential agreement has to get through parliament. Labour will not vote for it, nor will Libdems, nor SNP, and even the DUP might not vote for it, so it might not pass.

The only way it could or it would probably pass is if there is a referendum attached to it. If the British people decide whether deal or remain.

Such vote would probably be quite different from a plain deal vote, with suggestions the act would be amended by parliamentarians to include a referendum.

Parliament was already planing to have a referendum act and some claim they had the numbers for it, but if a deal is attached to it, then it might be a bit different as Labour’s leader Jeremy Corbyn considers how it might affect his chances in an election.

Yet such referendum deal act would put everyone in a tough position because both leavers and remainers would have to compromise for it to pass.

For leavers, a referendum would have tabloids shout betrayal, but maybe not if Boris suggests it or kind of agrees to it or whips his party to vote for a referendum deal act, which implicitly means he sort of agrees to it.

The British people in general would probably understand such referendum is necessary as the British people should bear all the blame for anything that happens, rather than Parliament, EU, Boris, or anyone else.

They should decide whether they want this structural re-alignment in the proposed terms, or whether they’d rather just stay.

A Referendum?

It may well be the only way the deal can pass is if there’s a referendum attached to it, but Labour might vote down a deal referendum act even though that’s their stated position, albeit with a deal they have negotiated.

It may still pass as Libdems would get their referendum, as would SNP, with the Tory rebels probably voting for it.

If the Brexiteers would, is not clear, but if they do vote for it then it has full legitimacy and could potentially unite the country as the people would have decided.

If there is no amendment, but just a deal or no deal, then it would probably be a very close call. If it does not pass, then parliament may well vote for a referendum with presumably this deal as a choice and remain. If no deal is agreed, then they may vote for a referendum on no-deal exit or remain, but realistically if there is a referendum it would be far better if it’s with a deal negotiated by Brexiteers and remain.

Then everyone knows where they stand, there’s no accusations of stitch up or anything, there’s just a people’s vote on a very difficult question which if its on a this deal or remain basis has us undecided because we’d have to consider a lot of things first during the referendum if there is such referendum.

If there isn’t one, then this would have passed parliament without the people being consulted on the most important treaty in a century.

Yet there’s no easy answer here, so whatever manages to get through parliament is obviously legitimate. We just hope there isn’t again a situation where nothing can get through.

It’s not something to be discounted however as there could well be a situation where the remain alliance votes down the deal, the brexiteers vote down the referendum deal, and nothing gets done.

But the most likely outcome is probably a quick referendum on the deal, unless it plainly passes, with November the 5th being a nice date for it, or November 28th, so ending this matter one way or another.

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