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Telegraph: Michel Barnier knows he is winning the Brexit negotiations. It’s time we turned the tide

Date: 11 01 2018

Michel Barnier knows he is winning the Brexit negotiations. It’s time we turned the tide

JOHN LONGWORTH

This week, I visited Brussels for the first time since the referendum in order to meet with Mr Barnier. While the mood in Brussels seemed glum, the town felt like an old glove having been a regular visitor over the past thirty five years, from when it didn’t really matter to when it mattered very greatly.

The objective of my visit was to read the runes of the likely direction of the next stage of the Brexit negotiations and to deliver a message about the determination of the British People to take control of our laws, money and borders.

It may have come as a surprise to some of my colleagues at the meeting with Barnier, but not to me, that the EU are determined to put the EU project ahead of the employment prospects  and wealth of its citizens and, as a consequence, take a very hard line with the UK in the upcoming negotiations. The fate of business people in Germany, Holland or Denmark is considered short-term collateral damage compared to the long term importance of the sacrosanct project. 

The Gaullist Mr Barnier accepted my compliment that he had successfully won the first round of negotiations, albeit against a weak adversary in the form of UK government. It was clear he and his EPP (European People’s Party) colleagues, who control all the major EU institutions, are determined that the UK should be shackled as much as possible in respect of our newly won economic freedoms in order that we may not compete with the EU. 

The position of the Chief Negotiator is entirely rational and internally consistent if the project is key to the interests of the EU (and certainly to the EU paymaster, Germany) and it is vital that our government grasp this, as they don’t seem to have done so far.

Britain has the prospect of prospering with or without an EU trade deal, provided we retain our newly won freedoms and are prepared to leverage these. As the chances of a special arrangement for the UK are limited, non existent, or very expensive, an early resolution of the likely outcome is essential if business on both sides of the channel is to have time to plan and implement necessary measures – certainty of the direction of travel being more important than the outcome itself.

I made these things clear to Mr Barnier and also that there is an increasing majority in the U.K. in favour of getting on and leaving the EU, Brexit is happening and Britain is determined to see it through. It is a pity that the British government is simultaneously sending out entirely the wrong signals on this in respect of the absence of a Ministry for a no deal scenario. 

Crucially, the meeting made it clear to me that the British government needs to adopt an equally tough line in the interests of our country, equal to that of the EU 27, and that will include an early view on whether a trade deal is likely to be forthcoming, with serious preparation for a no trade deal scenario.

In any event, the government must be prepared to leverage our economic freedoms to boost business and the economy, with or without a trade deal, rather than (as the Chancellor appears to be), trying to preserve a poorer version of what we have now, which can only result in us being worse off. Preparations for this must start now.

If the latest reports from Berlin are to be believed the Germans are insisting on substantial payments in order that the City banks have access to the EU Market.  It is not clear whether access means equivalence, in which case UK based banks are being discriminated against versus US or Japanese banks which is outrageous, or something better in which case it would be unprecedented for the EU and completely undermine Barnier’s position. It is clear that Barnier is being instructed to take a hard line in order that the Germans can mug us, if the reports are true.

We should bear in mind that while financial services contribute to the Treasury they represent 8 per cent of the economy, less than manufacturing. Only 9 per cent of financial services is subject to passporting  and thus there is a Single Market of sorts in these services. That therefore represents around 0.7 per cent of GDP. Of course there are additional professional services supporting this activity, but we should not let the tail wag the dog and it is only worth so much. As for the rest of financial services or indeed services in general, there is no single market in the EU, so why should we expect to have access?

We are now in real danger of having the Schrodinger’s Cat solution to Brexit. An outcome so complicated that it is designed to persuade those who voted for Brexit that Brexit is what they have got – the paradox of Brexit in name only.

But, desperate as our politicians may be,  there are more ways to skin a cat than capitulation dressed up as statesmanship. The government need to wake up to what is in the country’s interests and start to bat for Britain and the British people.

John Longworth is co-chairman of Leave means Leave, an entrepreneur and was formerly Director General of the British Chambers of Commerce

January 11th, 2018: Telegraph