A concession?

For all the fighting talk at the start of the fourth round of Brexit negotiations, the EU is now considering a concession.

Moving talks on to trade next month looks all but out of reach, but Bloomberg’s Ian Wishart and Viktoria Dendrinou report that EU governments may allow negotiations about the transition period to be brought forward. It’s a minor concession and the two sides remain far apart on some key issues, but movement on an issue that’s so crucial for U.K. businesses would ease negotiations over the bill.

It would also show that Prime Minister Theresa May’s speech in Florence last week hit at least some of the right notes in Europe.

The concession could see chief negotiator Michel Barnier handed an amended mandate. When EU leaders meet at a summit in October they may allow Barnier to address the transition alongside the divorce, according to people familiar with the situation. Initially any transition was meant to be debated only after the divorce had been settled and the outline of the future relationship had been agreed. Leaders may also include in their summit statement some language that would assure the Brits that the EU is willing to accept the two-year transition proposed by May.

May set out clearly for the first time in her Florence speech that the U.K. wants to continue current trading conditions and that existing rules would apply during any transition. She also offered to keep paying into the EU budget over the same two-year period, linking the divorce settlement to the transition deal for the first time. British businesses see a transition as vital to avoid a so-called cliff-edge Brexit in March 2019.

Still, the European Parliament offered a reminder on Wednesday of just how far apart the two sides remain. The parliament, which has a veto over a final deal, will demand that the European Court of Justice has jurisdiction in the U.K. during the transition—something that U.K. Brexit Secretary David Davis rejected as recently as last weekend. The ECJ is loathed by pro-Brexit campaigners and has taken on emblematic importance in the debate. The assembly will also insist that free movement of people continues during the transition, according to a summary of a draft resolution to be voted on next week.

We’ll get a better sense of how it’s gone inside the negotiating rooms today when Davis and Barnier hold a press conference at the end of the talks, probably around midday. 

May will then meet EU leaders for dinner at an informal summit in Estonia, where she will continue to press her case.

— Emma Ross-Thomas

Plan B | At least someone has a plan. The U.K.’s tax authority will be ready if Britain crashes out of the EU without a deal, according to Edward Troup, the outgoing executive chair of HMRC. 

BOE View | A rate hike would be good news and a sign the economy is healing, the Bank of England’s chief economist Andy Haldane said on Wednesday. Governor Mark Carney will have more on Thursday when he speaks at a conference in London. Consumer confidence rose to its highest in six months in September, data show on Thursday, though it’s still below pre-referendum levels.

Bombardier Blues | May’s failure to sway U.S. President Donald Trump in a trade dispute over Bombardier jets is a reminder of how lonely life will be for the U.K. outside Europe. Her “bitter disappointment” over the decision was perhaps made worse on a day when French President Emmanuel Macron, the champion of a united Europe, scored a big success with his industrial policy. 

London Losing | Vienna is the favorite to become the headquarters of the European Banking Authority, and Copenhagen to get the European Medicines Agency, Handelsblattreports.

Hong Kong Wins | The combined effect of Brexit and MiFID II—rules that change the way banks do business—are increasing Hong Kong’s appeal as a derivatives hub. And Hong Kong authorities are making the most of the momentum with plans to revamp their derivative rules.

On the Markets | The pound has declined every day through the fourth round of talks, trading at $1.3373 this morning.