Week Ahead (12 October)

W/C Monday, 12 October - Negotiations on trade deal continue in advance of 15 October deadline

This week’s European Council meeting of 15 and 16 October has long been flagged as a point at which a deal would have to be in sight in order to leave sufficient time for its ratification before the UK leaves the transition phase of Brexit on 1 January 2021. Boris Johnson has said from an early point in the negotiations that if the outlines of a deal are not clear by 15 October the UK will pull out of talks.

Michael Gove, speaking at the House of Lords Committee on the future relationship with the EU last Wednesday, said that the UK wanted a deal but would not "do a deal at any price".

EU Chief Negotiator Michel Barnier has said that 31 October is the “realistic deadline” for an agreement to be reached if new trading arrangements are to be in place for the end of the UK’s post-Brexit transition period on 1 January.

Two key stumbling blocks still remain, namely fishing rights and the level playing field for state aid. Having an EU presence on the ground in Belfast to monitor and implement the Northern Ireland also remains a sticking point, with the EU particularly insistent in light of the Internal Markets Bill.

David Frost, the UK's chief negotiator, said a decision will be taken closer to 15 October on whether an agreement is within reach.

Tuesday, 13 October - Irish budget to be announced

As part of the European Commission's budget monitoring programme, member states are required to submit their annual budgets to Brussels by 15 October each year. With that in mind, the Irish Minister for Finance, Pascal Donohoe, will reveal Ireland's budget for 2021 on Tuesday. Donohoe's budget will be especially scrutinised this year for its response to the pandemic and preparations for Brexit, as well as longer term issues such as housing and health.

After recording a budget surplus of 0.4% in 2019, Irish government spending in 2020 is already running at around €16 billion more than had been provided for in revised estimates due to pandemic mitigation measures. It is now expected that Donohoe will announce a fund worth up to €5 billion designed to reinforce the economy, aimed primarily at supporting businesses which have been badly hit by the pandemic and which will face a challenging 2021 due to Brexit.

Friday, 16 October - HICP Inflation data to be released

Eurostat is due to release HICP inflation data for the Eurozone for September on Friday. The HICP inflation flash estimate for September, released on 2 October, showed that the euro area’s annual inflation rate was -0.3% , down from -0.2% in August. By comparison, the inflation rate for September 2019 was 0.8%. The September flash figures remain far below the ECB’s target of a "below, but close to 2%" medium-term inflation rate.