Trump to offer Boris instant deal to help new PM secure Brexit

Boris Johnson is now the sure bet to be Britain’s next Prime Minister and sterling has barely budged. As one foreign exchange trader put it: “Boris is now in the price of the pound.’”

Just think about that paradox for a moment: Boris has been discounted. Forex traders appear to have priced in that there will not be any big currency swings when the man who threatens to take the UK out of the European Union without a deal takes the crown next month.

That suggests two likely outcomes from Johnson’s victory. Either those in the markets are not in the slightest bit worried that the UK leaves the EU on October 31 without some sort of agreement. Or traders think Johnson will pull off a new Brexit deal before Halloween.

It’s the latter option which makes the most sense and which, according to those inside the Johnson camp, the new PM is aiming to achieve once he takes office on July 22.

Here’s another possibility which I hear talked about with increasing certainty. President Trump will announce that the US is ready to sign-up to an immediate Free Trade Agreement with the UK the minute Johnson enters No 10.

One source tells me that Trump is ready to give the thumbs up to a deal as soon as Johnson takes power. “The President wants to do this to show he means business, and to give Johnson more elbow room to negotiate with the EU.”

As both Trump, and the US Ambassador, Woody Johnson, have made clear over the last few months, they have a big wish-list of prizes in return for such a deal ranging from new deals on everything from healthcare to finance. Indeed, the US Ambassador said in an interview ahead of Trump’s recent state visit the US was already “looking at all the components of the deal and trying to get everything lined up so when the time comes we’re ready to go”.

Well, that time could be within a month. Whispers of such a Trump outline deal could explain the change of mood in the air. There is a sense that – for all his threats – Johnson is determined to deliver Brexit with changes to the Withdrawal Agreement and, more importantly, to the Political Declaration.

Time is tight. Nothing can be passed through the House of Commons before the summer recess – which begins on July 25th, only three days after moving into No 10.

Yet despite fears to the contrary, it seems Commons clerks are Commons that there is room to manoeuvre to get the necessary legislation through Parliament between potential EU negotiations in September and the end of the extension period on October 31st.

A new WA would require two new Bills – in the Commons and the Lords – to be introduced. MPs would be asked to sit round the clock to get any new deal through this autumn, if Johnson can assemble votes for a revised agreement and if – if – the EU moves.

There is additional uncertainty created by the fact that the European Union is going through its own top-level changes: it needs to appoint a new European Commission president, to replace Jean-Claude Juncker, a new European Union Council president, to take over from Donald Tusk, a new European Central Bank president and EU High Representative for Foreign Affairs and Security Policy.

Have to say, the Conservative party leadership election looks a doddle by comparison. That uncertainty deepened yesterday when representatives of the 28 member states meeting in Brussels failed to agree on candidates for the two main roles. Talks have now been delayed until June 30.

Making the situation even more complex is that behind the scenes there is a bitter dispute raging between the Germans and the French about who gets these top jobs. President Macron and Chancellor Merkel are said to have already fallen out about how they carve up the roles between them, leading some to suggest the only way of solving the crisis is that they will have to be given to the heads of smaller member states as no one can agree.

This confusion in Brussels may well work in the UK’s favour, and could even help Britain’s new Brexit negotiating team in August and September for two reasons. First, there should be a sense of urgency that has been missing. Second, the new Commission is not formally in place until November 1st so the EU is unlikely to want the UK leaving without a deal at such a sensitive time. The EU’s negotiating team remains the same and is ready to start talking through August ahead of a potential September summit, it seems.

Let’s hope so. A revised deal seems to be what the markets are betting on and it helps explain why sterling has been relatively stable against both the euro and the dollar over the last few days. By close of play today, sterling was down a smidgeon at 0.2% lower at 1.1217 against the euro and 1.26 against the dollar.

If anything, it’s the threat of an early general election and fears of a Corbyn government that is worrying the markets the most, and why traders are convinced Johnson will do his utmost to pull a rabbit out of No 10 and deliver Brexit via a deal.

The last thing on earth that Johnson, who has been planning to be Prime Minister for most of his life, wants is a general election anytime soon. Maybe after he has delivered Brexit, but certainly not before.