Brexit: EU negotiator says City of London will have 'no place' in trade deal

It's unavoidable that financial firms and British banks would lose the passports that allow them to trade freely in the EU, as a result of any decision to quit the single market, says Michel Barnier

Michel Barnier (Photo: Politico)
Michel Barnier (Photo: Politico)

The UK cannot have a special deal for the City of London, said EU’s chief Brexit negotiator, dealing a blow to Theresa May’s hopes of securing a trade agreement with the bloc.

Michel Barnier said that it was unavoidable that financial firms and British banks would lose the passports that allow them to trade freely in the EU, as a result of any decision to quit the single market.

“There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist.”

Barnier added that the outcome was a consequence of “the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport.”

The declaration reduces the hopes of Brexit secretary David Davis, for a unique trade deal, which would include financial services.

Davis called for a “Canada plus plus plus” deal with the EU, a reference to the free trade agreement between Brussels and Ottawa in 2016, but with the addition of financial services.

In an exclusive interview with European newspaers, Barnier gave examples of his own three pulses, including defence, security, aviation and judicial cooperation.

The negotiator added:

  • A trade deal can be agreed within a two-year transition period, but has to be ratified by over 35 national and regional parliaments.
  • The UK can not stop Brexit unilaterally, arguing that overturning the decision to leave would require the consent of 27 EU member states.
  • The UK must follow all regulations of the EU during the transition period, including new laws that were passed after the UK left.
  • The UK could negotiate trade agreements with the rest of the world during the transition, but they could not come into fore.
  • The negotiator would not confirm British estimates that the final Brexit bill – the UK’s outstanding obligations to the EU – would be over €45bn.
  • Barnier spoke three days after EU leaders agreed that the UK made enough progress on the Brexit divorce to allow talks on the future.

The next key moment, he said, would be an EU summit in mid-March, when EU leaders are due to sign off guidelines that would lay out red lines.

“I hope very much that we will have a clear position from the British government by this time.”

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