EU negotiator Michel Barnier today insisted the Brexit deal Britain wants on financial services ‘doesn’t exist’.
Mr Barnier moved to quash British hopes of a bespoke deal that allows the City to keep its place as Europe’s leading financial centre after Brexit.
Theresa May insisted yesterday she would be able to secure a unique deal for Britain that allows the country to leave the EU behind while fostering a ‘deep and special partnership’.
Securing ‘passporting’ rights is essential to allow trading in euros to continue to in London.
But in an interview with a series of European newspapers, Mr Barnier today repeated warnings Britain would have to choose from an existing model for its deal.
EU negotiator Michel Barnier (pictured with Angela Merkel last week) today insisted the Brexit deal Britain wants on financial services ‘doesn’t exit’
Brussels wants Britain to choose between a Norway-style deal that involves accepting most EU rules in return for free trade or a more distant Canada-style agreement that is more distant and grants less access to continental markets.
Mr Barnier warned: ‘There is no place (for financial services).
‘There is not a single trade agreement that is open to financial services. It doesn’t exist.’
Mr Barnier blamed the potential outcome on the ‘red lines that the British have chosen themselves’.
‘In leaving the single market, they lose the financial services passport,’ he added.
Stefaan De Rynck, an aide to Mr Barnier, yesterday signalled a hard line in the looming trade talks.
He also warned that the UK will have to accept all EU rules during a mooted two-year transition period – and it is ‘not a given’ Brussels will agree to the idea.
The tough comments come as the sides prepare to launch the next phase of negotiations in the New Year, after the terms of the divorce deal were finally settled last week.
Britain will not get a special Brexit deal for the City of London, senior EU negotiator Stefaan De Rynck warned at Chatham House yesterday (pictured)
The government is expected to push for a ‘Canada plus plus plus’ deal, which would cover the vital services sector as well as goods trade.
The prospect has been pushed by Brexiteers as the financial sector benefits from ‘passporting’ rules that allow firms to trade freely across the continent without more red tape.
However, Mr De Rynck made clear Brussels would never accept that as it would mean the ‘end’ of the European single market.
‘There can be no sector-by-sector participation in the single market, and trying to square the FTA (free trade agreement) in a way that would lead to a sector-based participation in the single market would, for the EU, be the beginning of the end of the correct functioning and the integrity of the single market,’ he told the event at the Chatham House think-tank.
‘That is therefore something the EU will want to avoid.’
Theresa May (pictured in the Commons yesterday) must balance competing demands inside the Cabinet as Britain draws up its negotiating position ahead of the next round of talks
Mr De Rynck also insisted the UK will have to recognise the integrity of the single market and customs union during any transition period.
‘No cherry-picking, or what one could call a buffet-style transition where one picks and chooses the bits one likes,’ he said.
Mr De Rynck jibed that Brexit would ‘never be a success’ – lamenting that it was a ‘lose-lose situation’ for the UK and the EU.
‘For us, I don’t think we will ever label Brexit a success. It’s a mutual weakening, I think, of two parties,’ he said.
‘Economically, for us, Brexit is a lose-lose situation.
‘So, our negotiation here is not like we had with Japan, how do you create value together, but, how do you minimise losses economically on both sides?’
He did concede that all trade deals were technically ‘bespoke’ but dismissed the idea that models for agreements – such as those with Canada and Norway – could be mixed as Mrs May is urging.
Mrs May gathered her Brexit ‘war Cabinet’ yesterday for its first discussions on what model Britain will seek in the next phase of talks.
The full Cabinet is discussing the issue in Downing Street today.