Brexit stage right

If UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen are to be believed the clock on a possible trade deal will finally run out at midnight on 20 December.

It will bring down the curtain on a saga that should Brexit have been a movie the scriptwriters will have included everything that makes a blockbuster.

It started with a truly unforeseen twist for many when the UK voted to leave the EU and the following three and a half years have included, knife edge moments, a fair degree of comedy, dire warnings of catastrophe met with equal predictions of the happiest of endings. Scenes of turmoil in the streets have been interspersed with cheering flag waving crowds, whilst behind the scenes the negotiations have continued.

Like any great movie there has been a continual countdown to a conclusion that has had the audience left second guessing the outcome as the twists and turns continued. Brexit has also divided the audience on who the heroes and villains of the piece are.

Anyone who has paid attention to the way in which the European Union negotiates have always known the negotiations would be lengthy and any deal would be plucked from the fire at the very last moment.

However, with three days to go there does not seem to be any real signs that three core issues are any closer to being agreed. Noises of significant gaps between the two sides and extraordinarily little positivity being shown in the statements to the media point to the fact should a deal suddenly be announced it is likely to simply be the first shots in an ongoing war of words as neither side looks set to get what they are after.

While a no deal is highly likely to throw up a number of challenges for insurers as supply chains will surely be disrupted, the thorny issue of competition rules has the potential for a longer-term impact.

The EU wants the UK to agree to match any increase in standards imposed by Brussels. The UK says as a sovereign nation it is happy to agree that it will not reduce the standards that are currently established by both parties but should not be tied to any future changes. Emerging Risks has been told by sources close to the negotiations that the FCA’s decision to allow EU underwriters equivalence post 31 December was not greeted as the olive branch it was intended to be. Indeed, it has been used as an example of how the EU believes the UK will look to undermine EU regulatory standards and processes. Going forward if no deal is agreed it is likely the EU will be in no hurry to discuss financial services equivalence with the UK.

The fact that we are likely to be told whether we are to prepare for a no deal Brexit on the morning of the shortest day of the year in the Northern Hemisphere, does not bode well. It will however, write the final scenes of this sweeping blockbuster of a drama.

Only then will we have the ability to choose the correct title for the screenplay we have lived since June 2016.

Will the gaps between the two sides prove a “A Bridge Too Far, will the inability for a deal to be struck create the predicted economic “Armageddon” or will it herald “A Brave New World”? For insurer’s hopes of a level playing field, whatever the result of the trade talks this weekend, it is likely to be “The Long Walk to Freedom” of movement.

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