European consumers will pay dearly if Brussels tries to punish the City, Philip Hammond will warn today.
In the last of the Government’s ‘Road to Brexit’ speeches, the Chancellor will tell the EU it is ‘very much in our mutual interest’ to strike a trade deal giving extensive rights to Britain’s financial services sector.
Mr Hammond will point out the critical role played by the City as the cornerstone of Europe’s financial system. And he will warn that European consumers would face higher prices for a wide range of goods, including cars, loans and fuel, if the City is cut out.
Chancellor Philip Hammond has long argued that financial services should be part of the Brexit deal
Philip Hammond in front of a panel of MPs that it was in the interests of both Britain and the EU for an implementation period to be agreed at the March summit of EU leaders
Mr Hammond will stress that the UK and EU markets are ‘deeply interconnected’, with the City providing finance for European bank loans and car financing, as well as helping firms cope with fluctuating exchange rates and fuel prices.
‘In a nutshell, the message is that cutting out the City will mean higher prices for European consumers – people should be very careful,’ said a Treasury source.
The Chancellor will also take a swipe at the EU’s chief negotiator, Michel Barnier, who has warned repeatedly that financial services fall outside the scope of any agreement.
He will point out that Mr Barnier played a key role in trying to include services in an EU-US trade deal. Mr Hammond held talks in London with the French economy minister Bruno Le Maire yesterday.
WHEN WILL BRITAIN BE OUT OF THE EU?
Britain triggered Article 50 on March 29, 2017, starting a two year process for leaving the EU:
March 2018: Transition deal due to be agreed, running for about two years
October 2018: Political agreement on the future partnership due to be agreed
Early 2019: Major votes in Westminster and Brussels to ratify the deal
March 29, 2019: Article 50 expires, Britain leaves the EU. Transition is expected to keep everything the same for about two years
December 31, 2020: Transition expected to come to an end and the new relationship – if it has been agreed – should kick in
Mr Le Maire said that he wanted a fair Brexit deal – but insisted it could not cover financial services. ‘We need a good deal,’ he said.
‘But once again we have to avoid any misunderstanding between the British people and the French people, between the UK and the EU.
‘Financial services cannot be in a free trade agreement, for many reasons – for reasons of stability, for the sake of supervision because there are some very specific rules for financial services.’
The European Parliament’s chief Brexit negotiator, Guy Verhofstadt, yesterday warned Britain’s economy would suffer if it moved away from EU rules.
Speaking after talks in Downing Street, he said: ‘If the UK stays very near to the rules of the European Union that will secure jobs in Britain. That will be the best way forward for the British economy.
‘My preferential choice would be that Britain still is part of the single market, still is part of the customs union, then most problems would be solved.’
MPs will warn today that trade deals with around 70 countries could be put at risk unless the Government obtains legally watertight guarantees that they can continue after Brexit.
MPs cannot block Brexit, says Davis
Parliament will not be able to block Brexit at the last minute despite a promise to give MPs a meaningful vote, David Davis insisted yesterday.
Tory Remainers sided with Labour last year to win the right to have a say before Britain leaves the EU.
But the Brexit Secretary said yesterday that the vote would have no impact on Britain’s departure, which is scheduled for March next year.
Quizzed about the impact of a ‘no’ vote in the Commons, Mr Davis said: ‘I do not believe in the meaningful vote overruling the referendum. We will leave in all circumstances.’ His comments will ease Eurosceptic fears that pro-Remain MPs could use the vote – expected at the end of this year – to block Brexit.
But his intervention infuriated pro-Remain MPs. Labour’s Mary Creagh accused Mr Davis of ‘bluster and bravado’, adding: ‘The Government may still be smarting from their defeat in the Commons on the meaningful vote.
‘Elected representatives in Parliament should be able to reject the deal if it does not deliver for Britain and send the Government back to the negotiating table.’
The Chancellor will tell the EU it is ‘very much in our mutual interest’ to strike a trade deal giving extensive rights to Britain’s financial services sector