GIVE US TRADE DEAL OR YOU’LL SUFFER

HAMMOND’S STARK WARNING TO EU

PHILIP Hammond will warn Brussels today that excluding financial services from an EU free-trade deal will lead to crippling loan costs for millions of European consumers.

In a strongly-worded speech, the Chancellor will argue that EU threats to penalise the City after Brexit will only rebound, with crippling consequences for households.

People on both sides of the Channel could face soaring borrowing costs when seeking credit for cars or other major purchases, he warns.

“I am clear not only that it is possible to include financial services within a trade deal, but that it is very much in our mutual interest to do so,” he is expected to say.

Mr Hammond’s broadside, in the last of a series of “Road to Brexit” speeches by senior Cabinet ministers, is a direct riposte to European Commission claims that there is “no place” for financial services in a future trade agreement between Britain and the bloc.

He will say both British and European consumers would suffer if trade barriers are slapped on the finance sector because the UK economy is so closely linked to that of the EU.

Identical

“A trade deal between the UK and the EU must start from the reality of today – that our economies, including in financial services, are interconnected, that our regulatory frameworks are identical,” the Chancellor will say.

“And that our businesses and citizens depend on cross-border financial services trade in their day-to-day lives when they buy a car or take out a fixedrate loan or hedge their fuel costs.”

Mr Hammond will also confront the EU argument that Britain cannot have a “bespoke” trade deal to include the finance sector while quitting the single market and the customs union.

“So it is time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before. To them I say: every trade deal the EU has ever done has been unique,” he says.

“It has bespoke relationships with Turkey, Canada, Singapore, South Korea, Switzerland...”

He will also say the EU has “itself pursued ambitious financial services co-operation in its proposals” in the quest for a free-trade pact with the US and Britain and could do “so much better” than its blueprint for deals with America and Canada. Both those deals “were intended to promote convergence between entirely separate markets with different rules and low levels of interconnectedness”, he will say.

“Back then, British and French officials worked hand-in-hand on the proposals with the relevant parts of the European Commission,” he says. “At the time, people rightly argued this was a challenging objective but it need not be so in a partnership between the UK and the EU.

“Our markets are already deeply interconnected and we have demonstrated how we can work together over the past decade as we have repaired and defended the financial stability of our continent.

“If it could be done with Canada or the USA, it could be done with the UK – the EU’s closest financial services partner by far.”

Mr Hammond’s remarks directly answer a claim by EU chief negotiator Michel Barnier that keeping barrierfree access for Britain’s financial sector is impossible. And French economy minister Bruno Le Maire was the latest EU figure to reject such a deal, saying the best the UK could hope for was an “equivalence regime”.

Treasury officials noted last night that Mr Barnier was the EU’s internal market commissioner during trade deals that included financial services.

Mr Hammond’s warning follows an offer to Brussels from EU Exit Secretary David Davis yesterday to let bankers and other highly-skilled professionals continue to come to the UK if financial services are included in an eventual free-trade deal.

AT LONG last the Chancellor of the Exchequer has come out with a harsh warning about the self-inflicted damage the EU will cause to itself if it attempts to punish Britain for Brexit. The UK and European economies are so closely intertwined, he says, that to harm one would be to harm the other. At last a blast of good sense.

There are two points to be made here. The first is that he is absolutely right: it has been clear ever since Britain took the momentous decision to leave the EU that the Brussels bureaucrats have been set on punishing us rather than trying to strike a fair deal in our new life outside of the bloc. This is a timely reminder that it is in everyone’s interests to plough forward in negotiations that will benefit us all.

But it is also worth pointing out that it is Mr Hammond who has finally felt the need to speak. For very many months there has been a suspicion that the Chancellor, a Remainer, was trying to stymie our departure from the EU, or at least hold it up as long as he possibly could.

But there is more joy in heaven over one sinner that repenteth than 99 righteous men: we are glad to see Mr Hammond forsake his earlier and more regrettable beliefs.

And frankly, not before time.