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It is understood Ireland sees the phrase ‘regulatory alignment’ as providing the highest degree of comfort to both sides allowing talks to be bounced to the next phase while at the same time giving room for manoeuvre for negotiations in the second phase.
According to sources, alternative terms considered were regulatory convergence and regulatory equivalence, a condition banks have been seeking post Brexit to allow them continue to sell into the single market.
Brian Lucey, professor of finance at the school of business, Trinity College Dublin, said:
I think alignment is the more ambiguous form of words that give wriggle room. There will always be subtle divergence between two jurisdictions and it is always up to two national governments to decide what they are.
For instance Ireland and Northern Ireland have different duties and VAT levels even though both are currently in the EU.
“The big question is that regulatory alignment has to imply a regulatory or customs barrier in the Irish sea unless the UK aligns itself too,” said Lucey.
This will not be acceptable to Brexiteers or the Democratic Unionist Party which has said this is tantamount to the break up of the United Kingdom.
Ireland’s taoiseach Leo Varadkar has called a special meeting of all party leaders to update them on Brexit at lunchtime and will be making a statement at 2.30pm.
The government has not confirmed a deal has been sealed but sources are not denying reports from Brussels that agreement has been reached.
Deputy prime minister Simon Coveney is also expected to make a statement this afternoon.