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