EU’s Juncker Says the Risk of a No-Deal Brexit Is Now ‘Palpable’

Jonathan Stearns and Ian Wishart

(Bloomberg) -- European Commission President Jean-Claude Juncker said on Wednesday that the risk of a no-deal Brexit on Oct. 31 is now “palpable,” sparking a drop in the pound.

Juncker, speaking to the European Parliament in Strasbourg, France, after a meeting with U.K. Prime Minister Boris Johnson on Monday, said the main sticking point continued to be the so-called backstop to avoid a hard Irish border and demanded that the U.K. provide its proposals for an alternative in written form as soon as possible.

Johnson has said he’ll take the U.K. out of the EU at the end of October whether he’s obtained a new deal with the bloc or not. But talks have been sluggish and the EU is skeptical about whether the British government can come up with a solution that doesn’t breach the bloc’s red lines and that can get U.K. parliament approval.

The government wants to replace the backstop -- which the EU says is necessary to protect peace on the island of Ireland -- with new measures that avoid the U.K. staying in a customs union with the bloc. But with only six weeks to go, the government hasn’t put forward any formal proposals, EU officials said.

“I called on the prime minister to come forward with operational proposals in writing,” Juncker said. “Until such time as those proposals are presented, I will not be able to tell you, looking you straight in the eye, that any real progress has been achieved.”

Pound Falls

A British official said on Tuesday the government is sounding out the bloc on its ideas for the Irish border before submitting its plans in written form.

The pound dipped after Juncker’s comments, dropping 0.3% to $1.2467. It has staged a small recovery this month as the U.K. parliament and the British courts push back on Johnson’s efforts to crash out of the EU in October whether an agreement has been reached or not.

Johnson’s officials have indicated he will defy a new law designed to force him to seek a delay to Brexit rather than allow a no-deal split next month. The EU has signaled that it will be open to postponing the U.K.’s departure date rather than see a no-deal crash-out.

The talks with Johnson in Luxembourg were “friendly, constructive and, in part, positive,” Juncker said, but added that the prospect of the U.K. leaving the bloc without an agreement to soften the economic blow “remains real.”

While there aren’t any written proposals for alternatives to the backstop, the two sides have been talking about possibilities. The U.K. has suggested an all-Ireland agri-food zone, that would eliminate the need for checks. But the EU says this doesn’t go far enough to replace the backstop and insists the government must come up with more ideas.

(Updates with British comment in the sixth paragraph.)

--With assistance from John Ainger.

To contact the reporters on this story: Jonathan Stearns in Strasbourg, France at jstearns2@bloomberg.net;Ian Wishart in Brussels at iwishart@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Stuart Biggs

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