After the Salzburg summit, the prospects of the Brexit deal are gloomy as never before. Will gold gain on failed talks between the EU and the UK?

Cake Philosophy and Gold

The Salzburg summit was held last week. It was an informal summit of heads of the EU member states or governments. The participants discussed immigration, internal security, and Brexit. The negotiations between the UK and the EU attracted the most attention, as Donald Tusk, the European Council president, said that the Chequers plan for Brexit “will not work” and mocked Theresa May’s negotiating strategy in social media (he posted a picture of May and himself at a cake stand with the caption: “A piece of cake, perhaps? Sorry, no cherries.”

May did not like the joke and accused the EU of the lack of respect. She also complained that the EU does not want to negotiate with the UK. But it’s not true. One year ago, the United Kingdom rejected the proposal that the UK would become a member of the European Economic Area and be associated with the common bloc as Norway or Iceland. May rejected the ‘Norway model,’ saying that it would be a “mockery of the referendum.” And six months ago, UK rejected another proposal for an EU trade agreement, i.e. access to the single market (along with Northern Ireland, so that there would be no physical border in Ireland). May rejected the second proposal saying that it would effectively divide the country.

And last week, the British prime minister said that the UK wants to participate only in the free movement of goods, without the free movement of services, capital, and people. It is understandable, as about half of the UK exports is going to member countries. However, the EU has been informing for a year that it will not agree to partial access to its market, as it is based on four freedoms, not merely one. There is no “cherry picking”. We are not big fans of EU’s bureaucracy, but we agree that you cannot have the cake and eat it. The UK can either have a loose agreement like Canada, or a close agreement like Norway, but it cannot pick the best bits from both.