UK dismisses gravity of EU rejection of May’s Brexit proposal
Philip Hammond says any trade deal with EU must include financial services
Britain’s finance minister Philip Hammond: Deal on financial services is “very much in our mutual interest”. Photography: Stefan Rousseau/Pool
The British government has played down the significance of the European Union’s latest draft negotiating guidelines, which reject Theresa May’s proposal for a bespoke trade relationship after Brexit. Chancellor of the exchequer Philip Hammond characterised the guidelines as an opening bid from EU negotiators.
“The EU is a very skilled negotiator. They’ve done this many times – not precisely this, but they’ve negotiated agreements with many countries. They are very skilled, very disciplined in the way they carry out their negotiation. And it does not surprise me remotely that what they have set out this morning is a very tough position. That’s what any competent, skilled and experienced negotiator would do,” he said.
Mr Hammond said the simple free trade agreement (FTA) outlined by European Council president Donald Tusk was an inappropriate model for Britain and the EU. He said that the nature of trade between the EU and Britain was not comparable to that between the EU and a country such as Canada.
“The aspiration that the EU itself is setting out for our future relationship, it couldn’t be contained within a straightforward FTA. The EU itself has noted that because of the proximity of the UK and the European Union, because of complexity and scale of existing trade flows, in many respects a simple free trade agreement would leave many questions unresolved that would have to be resolved. Because the relationship between the UK and European Union countries will never be the same as the relationship between Canada and European Union countries, because of the different nature of the trade,” he said.
Ms May last week suggested that British regulations could remain aligned with the EU in some sectors and diverge in others and she said Britain should remain in some EU agencies after Brexit. Mr Hammond said on Wednesday that any future trade deal with the EU should include financial services, hinting that Britain could reject it if it did not.
“Given the shape of the British economy and our trade balance with the EU27, it’s hard to see how any deal that did not include services could look like a fair and balanced settlement,” he said.
“Not only is it possible to include financial services in a trade deal, but this is very much in our mutual interest to do so.”
Pro-European MPs seized on Mr Tusk’s suggestion that the EU’s position could change if the prime minister abandons her negotiating red lines. These include continued membership of the single market and the customs union and direct jurisdiction in Britain of the European Court of Justice.
Labour’s Chris Leslie said it was time for the government to be honest about the consequences of a hard Brexit.
“The EU could hardly have been clearer this morning in rejecting the government’s cherry-picking approach of demanding all the privileges of single market membership but rejecting the responsibilities it brings. Yet ministers refuse to recognise this. The government misses every chance it has to be honest with the British people about the costs of Brexit. As these become clearer, everyone has every right to keep an open mind about whether it is the right choice for our country,” he said.
Earlier, DUP leader Nigel Dodds raised the current negotiations with the EU about the future of the Border during prime minister’s questions. He said EU chief negotiator Michel Barnier had achieved the unlikely feat of uniting the Conservatives, Labour and the DUP in opposition to last week’s draft legal text on the issue.