The new week on the financial markets begins with more conflict and disagreement about old issues.
First off, the big debate surrounding Brexit is back on. The United Kingdom and the European Union are currently negotiating their future trade relationship after the UK completely separates from the bloc at the end of 2020. In order for legislation to be passed on time, there is a soft deadline for an agreement in October, but both parties seem far from a compromise still.
Just today UK Prime Minister Boris Johnson stated that if an agreement is not reached by october 15 (when a European Council meeting is scheduled), then his country will be fine moving on without a free trade agreement with the EU. This position signalled to EU leaders that the UK is not fully committed to the talks.
In addition, the UK government is preparing a bill that will reportedly create a hard border between Northern Ireland (in the UK) and the Republic of Ireland (in the EU). This is in direct violation of the withdrawal agreement signed with the EU last year and is facing strong opposition from Ireland. Though this bill is not fully ready yet, it is putting the further progress in trade negotiations between the UK and EU in question. The British pound has weakened against the euro as a result.
Meanwhile, the European Union is entering another confrontation, this time with Russia due to the poisoning of Alexei Navalny. Navalny is a prominent opponent of Putin who was poisoned in late August. Germany took great efforts to move him from a Russian hospital, which initially declined to release him, to a German one, where it was established that Navalny was poisoned with Novichok, which is the same poison used against Sergei Skripal, another prominent critic of Vladimir Putin.
Novichok is a high-grade chemical weapon whose usage has been condemned by the European Union and the United States. Today Germany announced that it is considering sanctions against Russia, including pausing work on the Nord Stream 2 gas pipeline, which will hurt Russia’s political influence over several Eastern European countries.
Though other EU member states have spoken against Nord Stream 2 in the past, this is the first time Germany, who has a greater say in the matter, is taking a stance against it.
Lastly, the markets in the United States are inactive today due to the Labour Day long weekend celebrations.
