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The EU had decided to start a legal process against the UK government. The issue at stake is the Internal Market Bill, which the EU claims breaches international law.
“The commission has decided to send a letter of formal notice to the U.K. government. This draft bill is by its very nature a breach of the obligation of good faith laid down in the Withdrawal Agreement,” said the president of the European Commission, Ursula von der Leyen.
The letter of formal notice is the first step in a potentially far-reaching legal proceeding against the UK, and if not resolved in a timely manner, could result in a lawsuit. The letter's text gives the UK government one month to respond.
The Internal Market Bill has cleared the House of Commons on Tuesday and will now come before the House of Lords, where it is possible that the bill will not pass in due course, due to the fact that there is no Conservative majority there.
Many people feel that the House of Lords will block the bill, by one of the many means they will have at their disposal.
Five ex-prime ministers of the UK (all of them still living) have independently critiqued Johnson for the Internal Market bill, saying that it has the potential to damage the UK on an international level.
In response to the news, the GBP has dropped a further 0.7 percent relative to the USD.
Legal actions such as this one are not uncommon on the part of the EU, and dozens of letters like this are sent in a typical month, mostly to member states the US feels have committed some breach of EU regulations or guidelines.