The Brexit reality gulf widens

UK Brexit secretary David Davis and Chancellor Philip Hammond are on a charm offensive in Germany trying to convince German business that they have a vital interest in Britain getting a bespoke deal with the EU. In a guest article in Frankfurter Allgemeine Zeitung they said the deal should be “the most ambitious in the world” that should “cover the length and breadth of our economies including the service industries — and financial services”.

In a speech to Belgian business people, EU chief negotiator Michel Barnier said the British decisions to leave the customs union and reject the supervision of the European Court of Justice meant the only option available to them was a Canada-style deal. In an apparent reference to the regular British claim that regulatory equivalence means that a much better deal should be possible, he said: “We have never given up our decision-making autonomy over regulation.” A state that leaves the EU regulatory framework must lose the benefits of the internal market, he said.

The Canada deal excludes most services and specifically financial services. However, according to a British academic interviewed on BBC Radio 4, it does contain a clause that if any other country is offered better market access on a deal of that type, Canada must get the same access. In fact, a number of EU trade agreements have the same clause. The point is that if the UK were to be offered a Canada-style deal with no commitment to the Four Freedoms or ECJ jurisdiction, plus any access to the EU financial services market, other countries could automatically claim the same access.