British banks won’t get any special Brexit deals, says EU
A SPECIAL Brexit deal covering British banks is not on the table, the EU’s chief negotiator said yesterday.
Michel Barnier dismissed claims that Brussels ‘desperately needs’ the closest financial relationship with the UK.
He outlined how the EU is preparing to downgrade its ties with the City and said the UK will have to accept the more limited access offered to the US.
The French official claimed the negative impact of Brexit would be ‘substantially higher’ for the UK and suggested that companies may withdraw investment in Britain.
He also claimed that ‘EU talent’, notably nurses and doctors, could stop coming to the UK because they will see it as a less attractive place after Brexit.
The comments follow repeated warnings by leading UK figures, such as Bank of England governor Mark Carney, that a bad divorce deal will hurt the EU more than it hurts Britain.
Chancellor Philip Hammond is pushing for a comprehensive trade deal that gives the City privileged access to the remaining 27 EU countries after Brexit.
Outlining the EU’s restrictive approach, Mr Barnier suggested that the huge bonuses of British bankers prompted the financial crisis.
He said: ‘ Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today.
‘This is not what we hear from market participants, and it is not the analysis that we have made ourselves.’ Theresa May has accepted that British firms will lose ‘passporting’ rights that allow them to operate across the EU.
But in an attempt to push for a comprehensive agreement, she wants to build a joint regulatory system and said failure to reach a deal will ‘hurt both economies’. However, Brussels has said that its mechanism for dealing with non-EU countries – equivalence – is the only available solution. The system involves both sides effectively striving to match each other’s rules.
Critics have described the system as inferior for the City and warn that it can be termi--
‘Prepare for the worst’
nated unilaterally by the EU at short notice.
Speaking at a conference in Sofia, Bulgaria, Mr Barnier said yesterday: ‘I can perfectly see the UK’s logic and interest in pleading for a system of “mutual recognition” and “reciprocal regulatory equivalence”. But this will not work.’
He said the UK would be expected to closely mirror EU regulations, citing the possi-- bility of a future economic crash if it does not.
‘Let’s not have a short memory,’ he warned. ‘We all saw during the crisis that the risks of financial instability were ultimately borne by taxpayers – not only in the UK.
‘We saw for instance that remuneration of bankers set the wrong incentives and allowed excessive risk-taking.’
Insisting that the EU’s system was the only option available to the UK, Mr Barnier added: ‘Why would the equivalence system, which works well for the US industry, not work for the City?
‘In the meantime [before a deal] both market participants and public authorities should hope for the best, but prepare for the worst.’
Mr Barnier used his speech to warn that ‘frictionless trade’ is not possible for the UK outside of either a customs union or the EU single market.
AMBER Rudd was the target of a Eurosceptic backlash last night after suggesting Britain could stay in a customs union with the EU.
The Home Secretary dealt her political career a further blow by undermining Theresa May’s pledge to make a clean break with the EU.
Miss Rudd had already faced renewed calls to resign over the Windrush scandal after telling MPs she had been wrong to deny the Home Office pursues targets for removing illegal migrants.
In the Commons, Tory MPs rallied behind the Home Secretary in a bid to deny Labour a scalp and protect the Prime Minister from direct criticism.
But hours later, Miss Rudd opened up a second front in the crisis by suggesting the Government had not yet decided whether to make a clean break with the EU. Her comments came at a lunch in Westminster at which she:
■ Revealed that controversial internal performance targets for removing illegal migrants would be axed;
■ Questioned the Government’s approach to tackling illegal immigration, saying: ‘I don’t like the phrase hostile environment’;
■ Refused to endorse Mrs May’s flagship target for slashing net migration to the tens of thousands;
■ Admitted that her leadership hopes had been dented, saying: ‘I’m just thinking about staying in the game’;
■ Acknowledged that the Government’s handling of the Windrush affair had been a ‘fiasco’, but refused to say if she had considered resigning;
■ Insisted she would act to tackle knife crime, after figures showed offences surged 22 per cent last year.
Miss Rudd was a leading figure in the Remain campaign and is a member of Mrs May’s 11-strong Brexit ‘war cabinet’.
Asked if Britain was likely to leave the customs union, she replied: ‘I am not going to be drawn on that.
‘We still have a few discussions to be had in a really positive, consensual, easy way amongst some of my Cabinet colleagues in order to arrive at a final position.’
Her comments appeared to contradict Mrs May’s pledge – repeated on Wednesday – that Britain will leave the customs union after Brexit.
Eurosceptic Tories reacted angrily to Miss Rudd’s comments.
MP Peter Bone said he ‘could not understand’ why she did not support government policy. He added: ‘We cannot have a home secretary not supporting this key plank of Brexit.’
Former Cabinet minister John Redwood said: ‘ She is wrong. The Government has a final position on the customs union, which is that we will be leaving when we leave the EU.’ Jacob Rees-Mogg said the Government’s commitment to leave the customs union was in the Tory manifesto, adding: ‘ The Home Secretary is bound by collective responsibility.’
A former cabinet minister said: ‘That is a very stupid thing to say. She is already under pressure over her own conduct at the Home Office – she cannot afford to put herself at odds with the PM and the bulk of the Parliamentary party.’
Miss Rudd later put out a partial clarification, saying she ‘ should have been clearer’ that the UK would leave the customs union.
But she left the door open to forming a new customs union with Brussels, a move that would end the dream of signing new trade deals around the world.
In the Commons yesterday, Miss Rudd faced fresh Labour calls to resign over her handling of the Windrush scandal.
But Eurosceptic Philip Davies urged her not to be ‘knocked off course’ on the need to tackle illegal immigration, saying: ‘Most people in the real world, outside of the Labour party ... believe that the Government does not do enough to remove illegal immigrants from this country.’
Brexit will allow Britain to build ‘new and expanded economic links’ with fast-growing countries in the Asia-Pacific, John Howard, Australia’s prime minister from 1996 to 2007, said yesterday.
‘A very stupid thing to say’
MEMORABLY described as ‘ not fit for purpose’ by Labour’s John Reid, the Home Office has a long-standing and well-deserved reputation as a chaotic department and a graveyard for political careers.
So the measure of a Home Secretary is less whether some crisis emerges under their watch, but how well they respond. By that yardstick, Amber Rudd is performing very poorly indeed.
For many months she ignored the reports showing that Caribbean migrants who have lived in Britain for 50 years were being unfairly stripped of their residency rights and urged to leave the country.
Yes, she has apologised for the Windrush fiasco and yes, she has taken steps to fix the problem. But her pathetically slow response suggests a minister either out of touch or credulously prepared to accept her officials’ advice that nothing was amiss. Then came her appearance before a committee of MPs on Wednesday, when she denied her department sets targets for removing illegal immigrants. Dragged to the Commons yesterday morning after she was shown to be wrong, Miss Rudd was forced to admit there were such targets. How could she not know such a basic fact about the functioning of her department? To make matters worse, she then announced this perfectly sensible policy – apparently in use for decades – would be abandoned. In doing so she handed ammunition to those on the Left who have sought, cynically, to exploit Windrush to attack all immigration controls.
Given there are, by Home Office estimates, some one million illegal immigrants living in Britain, what’s wrong with these extremely modest targets for removing them?
To cap a torrid 48 hours, Miss Rudd then blundered again by refusing to accept, when asked by journalists, that Britain would leave the EU customs union after Brexit – a central tenet of government policy. Once again she was humiliatingly forced to correct herself.
Her excuse that she didn’t want to discuss future customs arrangements will do nothing to calm the long-held fears of Tory Brexiteers that Miss Rudd – a leading light in the Remain campaign – retains her Europhile instincts.
Irrespective of Brexit, the last two days have compounded the impression that Miss Rudd is out of her depth. She needs to get a grip, and urgently.