RTE Europe editor, Tony Connelly, reports
The tweet thread reads:
Article 16 update: growing expectation that the UK will trigger. Much more intense discussion in the European Commission about how the EU shd respond.
While the Commission has avoided detailed discussion till now with member states, preferring to regard it as hypothetical, there are more contacts now with capitals.
However, the view is that the EU's response could be much swifter and more "radical" than expected.
This *could* include termination of the TCA, or a suspension, which would require respectively 12 and nine mths notice.
Any big EU response would probably require an emergency EU summit - shd be stressed, however, that this is all still in the realm of discussion/preparation.
This relates to the NI protocol in avoiding a hard border with Ireland as part of the Brexit agreement. Article 16 allows any one side to take steps or so-called "safeguards" if the protocol upsets the the balance of trade or brings about "serious" economic difficulties.
The UK has maintained that conditions have been met to trigger it but they haven't done so just yet, fearing that it could lead to a collapse in ongoing talks with the EU so far.
The wider implication in all of this is that it could lead to more of a trade war between the UK and EU but I doubt we'll see any immediate escalation to that. There is the potential that we could see both sides exchange some jabs but either way, it is definitely a negative factor for both economies if Article 16 is triggered and the EU responds firmly.
That said, it will take time - weeks or even months - for the dirty laundry to clear and for both sides to engage in more meaningful discussions to try and reach a resolution.
In any case, this is also something to watch for the pound after having seen sentiment deteriorate sharply post-BOE amid the technical shove lower yesterday.
