EU warns Britain reneging on Brexit deal could jeopardize peace in North Ireland

The European Union warned the British government on Monday that any attempt to renege on commitments made ahead of its departure from the bloc earlier this year would put at risk the hard-won peace in Northern Ireland.

Amid growing signs that trust between the two sides is evaporating ahead of another round of post-Brexit talks in London on Tuesday, the bloc said any attempt by the British government to unilaterally ride roughshod over the divorce agreement could also jeopardize the prospects for a trade deal.

Ursula von der Leyen, president of the EU’s executive commission, said she expects Boris Johnson’s government to implement the withdrawal agreement that paved the way for the U.K.’s smooth departure from the bloc on Jan. 31.

She said in a tweet that the agreement is an “obligation under international law” and a “prerequisite for any future partnership.”

She added that the section in the agreement that ensures an open border between Northern Ireland, which is part of the U.K., and EU member Ireland, is “essential to protect peace and stability on the island.”

Her comments followed a report in the Financial Times newspaper that the British government is planning domestic legislation that would effectively override the international treaty obligations enshrined within the withdrawal agreement, particularly over issues related to the Irish border.

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Johnson is also expected to say later Monday that Britain could walk away from the talks within weeks, and to insist that a no-deal exit would be a “good outcome for the U.K.” He is set to say that an agreement must be sealed by an EU summit scheduled for Oct. 15. The EU has previously said negotiations must conclude before the end of October.

Monday’s developments prompted widespread selling of the British pound as traders price in a growing likelihood that the trade talks could be heading for collapse. The pound was down 0.9% against both the dollar and the euro.

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The EU’s chief negotiator in the talks, Michel Barnier, said Monday that he will be seeking clarification from David Frost, his counterpart in the U.K., on Tuesday “to better understand the government’s intentions.”

The divorce deal allowed for a transition period through to the end of this year, during which the two sides are meant to sort out a trade agreement for the future. During this period, the U.K. remains within the EU’s economic orbit, benefiting from frictionless and tariff-free trade.

“This protocol is a condition for preserving peace and for protecting the integrity of the single market,” Barnier told French radio France Inter. “It’s also a pre-condition for confidence between us because everything that has been signed in the past must be respected.”

Britain’s environment secretary, George Eustice, sought to downplay concerns that the government is seeking to tear up its treaty obligations and argued that the Internal Market Bill, due to be published Wednesday, aims to to tie up some “loose ends” where there was a need for “legal certainty.”

He insisted that the government remained committed to the principles of the deal, which will see customs checks on some goods moving from the rest of the U.K. to Northern Ireland.

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“What we are talking about here is what type of administrative customs processes you might have for goods that might be at risk of entering the EU single market,” he told BBC radio.

James Slack, the prime minister’s spokesman, also insisted that the government remains “fully committed” to the withdrawal agreement and that this week’s legislation is intended to clear up “ambiguity” and avoid “unintended consequences” in the complex border agreement.

Were the U.K. to walk away from the talks, the two sides would be heading toward a “no-deal” outcome that would see tariffs and other impediments to trade imposed at the start of the year.

Kallum Pickering, senior economist at Berenberg Bank, said that in that situation the costs would fall “disproportionately” on the U.K., potentially tipping it back into recession in early 2021, while temporarily slowing the EU recovery.

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“For the U.K. and the EU to find compromises on the sticking points, both sides must work to build trust,” he said. “The U.K.’s actions are doing the opposite.”

The trade discussions have made very little progress over the summer, with the two sides seemingly wide apart on several issues, notably on business regulations, the extent to which the U.K. can support industries and over the EU’s access to British waters.

The German government said a deal was still possible and that it’s in the interest of both sides that one is secured.

“For this, Britain in particular needs to move on the core issues of governance, what’s summed up as `level playing field,’ and on the issue of fisheries,” said government spokesman Steffen Seibert.