×

Brexit talks kick off with calls for a ‘strong and special partnership’

  • Brexit talks begin Monday, one year on from Britain's vote to leave the EU.
  • U.K. Brexit secretary David Davis outlines hopes for a "strong and special partnership" with the EU once Britain leaves the union.
  • Chief EU negotiator Michel Barnier said talks will focus first on the "uncertainties caused by Brexit."
  • Sterling rises as negotiations commence.
Jack Taylor | Getty Images

Britain's Brexit Secretary David Davis has detailed his hopes for a "strong and special partnership" with the EU as Brexit negotiations officially commenced on Monday, a year on from the U.K.'s shock referendum result.

In a statement which closely echoed U.K. Prime Minister Theresa May's "strong and stable" election tagline, Davis, who is in Brussels to meet with his EU counterpart Michel Barnier, said he was entering discussions in a "positive and constructive" manner.

He added that he aims to retain close ties with Britain's "allies and friends" in Europe.

Davis and Barnier are expected to begin talks on Monday by outlining their priorities for Britain's departure from the EU and a timetable for discussions. This timetable is expected to follow the EU's "preferred pattern", which will focus on exit negotiations first and any future relationship later, according to EU sources cited by the BBC.

Barnier said on Monday that the negotiations must first tackle "the uncertainties caused by Brexit."

Michel Barnier during a news conference after a meeting of EU finance ministers at the European Council headquarters in Brussels, Belgium.
Jasper Juinen | Bloomberg | Getty Images
Michel Barnier during a news conference after a meeting of EU finance ministers at the European Council headquarters in Brussels, Belgium.

Key priorities are set to include the status of expats, the U.K.'s "exit bill" – the cash settlement expected by the EU – and the border between Northern Ireland and continued EU member the Republic of Ireland.

The U.K. had initially hoped to simultaneously negotiate its departure from the EU while establishing new ties with the union. More recently, however, it appears to have renegaded on these aims, with Prime Minister Theresa May insisting that Britain should be willing to relinquish any partnership with the EU if a suitable deal cannot be struck within the two-year negotiating time frame.

May has remained fervently in favor of a so-called hard Brexit, but has faced heavy resistance from opponents in parliament.

In April she called a snap general election in a bid to increase her parliamentary majority and give her a mandate to drive ahead with her Brexit plans. However, on June 6 she failed to secure a majority and is currently in talks with the small Northern Irish Democrat Unionist Party (DUP) to form a parliamentary alliance.

Prime Minister Theresa May looks on at the Magnet Leisure Centre in Maidenhead, after she held her seat
Stefan Rousseau | PA Images | Getty Images
Prime Minister Theresa May looks on at the Magnet Leisure Centre in Maidenhead, after she held her seat

Though May's gamble will have done little to strengthen the U.K.'s position in EU talks, analysts suspect it will do little to change its intended Brexit agenda.

"The elections were terrible for May but I don't think the fundamental dynamics of the Brexit negotiations will change because of that," Stefan Auer, associate professor in European Studies at the University of Hong Kong, told CNBC on Monday.

"The only possibility of a soft Brexit is if the EU itself fundamentally changes, if the EU allows member states to reclaim more control over their destiny, which is something I've advocated for many years."

German Chancellor Angela Merkel, who is considered one of the driving forces behind the EU, said on Monday that she hoped negotiations would secure a "good agreement" for both parties but reiterated the unity of remaining member states.

"For me, it is above all about the EU27 proceeding together and listening carefully to Britain's wishes and expectations," Merkel said after meeting Romanian President Klaus Iohannis.

U.K. Chancellor Philip Hammond confirmed on Sunday that the U.K. would drive ahead with plans to leave the single market and customs union. It had been thought that Hammond, a vocal backer of the Remain campaign, could try to use May's weakened position to promote a softer Brexit and continued membership of the customs union.

Sterling rose Monday morning as talks commenced. It was trading at $1.2796 against the greenback and 87.45 pence per euro around midday.

The British currency had posted a modest rise against both currencies last week ahead of the talks. However, Ray Attrill, co-head of FX strategy at National Australia Bank, said he expects sterling momentum to remain weak if the government continues to pursue a clean break from the union.

"Negotiations will still be towing the hard Brexit line but I wonder whether what we'll be seeing or hearing 2-3 months months down the tack will be different today....if markets get a sense of a softer Brexit, that will be positive for sterling," Attrill told CNBC Monday.

- Nyshka Chandran contributed to this report

Follow CNBC International on Twitter and Facebook.