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04 Dec 2020
3 min read

EU Amid Internal Conflicts over Budget, UK Faces New Demands in Critical Phase

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Written by OspreyFX News Team

EU Amid Internal Conflicts over Budget, UK Faces New Demands in Critical Phase

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Key Takeaway

  • Internal disagreements still dominate the EU
  • Two key issues still dominate Brexit talks

The EU has been trying to resolve internal disagreements among its Member States over the past few weeks as Hungary and Poland have vetoed the next budget of nearly €2tn and the EU’s coronavirus recovery package, insisting that the EU’s rule-of-law revision is unfair. Leaders of the two countries are upset about this mechanism since they are seeing it as a way through which the EU can target their countries specifically through the power to suspend funding wherever the bloc’s values are being threatened.

Viktor Orban and Mateusz Morawiecki have indicated that they will not budge, so the EU’s Budget Commissioner, Johannes Hahn has warned the two countries that Brussels will move on without them and they will be excluded from the recovery fund. Mr. Hahn commented earlier that the EU has found a way to get around Warsaw and Budapest and their objections to the EU’s proposed budgets. If the EU proceeds with the approval of the €750b without Poland and Hungary, it is uncertain whether the recovery package would be decreased in size or if the 25 Member States will receive more funding. EU Budget Commissioner Hahn is still optimistic that the EU can find a way to get Hungary and Poland on board. The last opportunity to do just that will be during the EU Leader Summit scheduled for Dec 10 and Dec 11. Additionally, Romania’s Prime Minister, Ludovic Orban, has criticized his Hungarian and Polish peers for vetoing the EU budget and coronavirus package. He stated that all EU countries should respect the rule of law and emphasized that the economic aid needed by the EU is threatened by their stance.

Brexit – An Unexpected Request by the French President

Over to the Brexit front, British officials accuse French President Emmanuel Macron of throwing a wrench into Brexit talks last night. They say Mr. Macron has unexpectedly introduced new demands at the eleventh hour. Currently, two significant issues remain on the table. One relates to the access of EU fishing boats to British territorial waters. The second one is related to what is called a level playing field, that is, the concept that the UK and the EU should be able to compete fairly under a trade deal. France, being a geographical neighbor of the UK is probably the most affected by the deals of any of the EU Member States. As a result, President Macron has become personally involved in the negotiations. The French President insisted that France wants guarantees that the UK won’t undercut the European Union and if it does, there should be a remedy available or sanctions imposed. Earlier on Friday, French Minister Clement Beaune added to the mix of uncertainties by saying that France would veto any Brexit deal if it was considered unfavorable to French interests.

As the final hour approaches and Brexit talks were on the verge of a breakthrough, the two sides moved backward as prospects of a deal receded. The Great British pound, however, seems unfazed by the uncertainty. The UK currency rallied to its highest level of the year reaching right for the 1.3500 marks against the US dollar.