Why our cautious Chancellor’s just dropped a Brexit bomb on Berlin ...

AS A proud member of Her Majesty’s Press, I am reluctant to admit this: but yesterday’s most significant story about the forthcoming Brexit negotiations came not in the British Sunday newspapers, but in Welt am Sonntag.

While our own newspapers made a lot of intimations that Theresa May’s muchanticipated speech on the matter tomorrow will make it clear she is prepared for the UK to leave both the European Single Market and the Brussels- negotiated Customs Union, that German paper had a remarkable on-the-record interview with the Chancellor Philip Hammond.

Hammond had been seen in Germany — and across the Continent — as their biggest ally in the Cabinet against what those bitterly opposed to the UK’s departure from the EU invariably call ‘Hard Brexit’.

Even after the referendum result, Mr Hammond continued to issue gloomy statements about what would ensue (he had been a Remainer) — so much so that one Cabinet minister snapped: ‘It’s as though George Osborne had never left.’

But in his interview for Welt am Sonntag, Mr Hammond dashed the hopes of those who saw the Treasury as a drag anchor against what might be called the Full Brexit. He insisted the leaders of the EU ‘need to respect the British people’s sense that our history and destiny is an engagement with the rest of the world . . . historically we have never been a nation that was focused on continental Europe’.

Threat

And he issued a direct threat of what Britain would do if the EU attempted to restrict in any way our ‘access to the European market’. He declared that rather than ‘lie down and say, too bad, we’ve been wounded — if we are forced to be something different, then we will have to become something different’.

He went on to warn that Germany will pay a high price if that happened: ‘I think Mercedes-Benz and BMW and Volkswagen would also like to sell their cars in the UK market without tariffs. Germany’s biggest bank has a large operation in London and I assume it would like to continue that operation.’

I’m told the Welt am Sonntag journalists were so surprised by the tone of these remarks that they called the Treasury afterwards to check that the Chancellor really wanted to say all this on the record. The response was: Yes, he does.

It has gone off like a bomb in Berlin. The head of the Bundestag’s foreign affairs committee, Norbert Roettgen, accused our Chancellor of ‘making threats damaging the UK itself’. But then he added: ‘We should focus on common interests and compromises.’ Which actually makes a pleasant change from what we have been hearing so far from such sources, consisting entirely of warnings that Britain can expect only pain.

The interesting question is, why has Mr Hammond suddenly changed his tone from warning the British, to warning the Germans? In part, I am sure, it is because the Treasury’s predictions of what would happen to the British economy — simply as a result of voting for Brexit — have been proved scaremongering nonsense.

But it is also, in part, a negotiating tactic. The main reason David Cameron got such a pathetic deal in his so-called ‘renegotiation of our EU membership’ was that he was never prepared to walk away from the table. And Brussels knew it.

It’s not enough for Theresa May to say that if she doesn’t get a bespoke UK/EU free trade deal outside the Single Market and the Customs Union, she will walk away and risk the imposition of tariffs on both sides. She has to mean it — and be believed.

Anathema

Such rough talk from her supposedly ultra-cautious Chancellor gives her much greater credibility in such a stand-off.

But Mr Hammond’s change of tone is not just a negotiating ploy. As he also pointed out to his German interviewers: ‘Since the referendum, we have seen, on the European side, movement away from the UK positions . . . to things that are anathema to the UK: more political integration.’

Some of that ‘movement’ would now be causing political mayhem in the UK, if we had not already voted to leave. Here are just four examples.

Last week, details leaked of an EU White Paper suggesting Brussels be allowed to impose taxes directly on member states, to include a levy on CO2 emissions, an electricity tax and an EU-wide corporate income tax.

Last month, the European Court of Justice ruled that British laws allowing the security services retention of bulk data on calls and emails would not be allowed to stand as they ‘ exceeded what is strictly necessary’.

Also last month, Brussels ruled that all members of the Single Market had to impose a requirement that every off-road vehicle — every quadbike, every golf-cart — had to be covered by insurance for ‘third-party injury and damage’. Our own Department for Transport said that it ‘opposed measures which impose an unreasonable burden on the public’ but that it would have to abide by the new rule until Britain exits the EU.

And, only a few days ago, Brussels ruled that even motorists who break the law by driving without insurance should be protected if their car is damaged — so lawabiding drivers face an increase in insurance bills to cover that cost.

Hostility

It is only because we are leaving the EU that these four power-grabs — proposing new EU-wide taxes; adversely affecting MI5’s ability to protect the British people; creating a totally new overhead for farmers and families playing around with quadbikes; and driving up the costs of running a car — have not caused an even sharper spike in the British people’s hostility to our membership.

Yesterday, the former Deputy PM, Nick Clegg, pleaded that Mrs May should go for a ‘Norway model’ — that is, Britain outside the EU, but still members of its Single Market. This is the same Nick Clegg who, before the referendum vote, mocked this ‘solution’: ‘Norway have to pay into EU coffers, they have to obey all EU laws: it all gets decided by everyone else in Brussels and they have to translate it into law in Oslo. They have no power whatever, all the rules get made by foreigners: utter powerlessness.’

So the most eminent representative in Westminster of the die-hard Remainers thinks such ‘powerlessness’ is better than leaving the Single Market — and, as Mrs May put it in her Conservative Party conference speech, getting ‘an agreement between an independent, sovereign United Kingdom and the European Union’.

Sorry, Mr ex-Deputy Prime Minister: you’ve lost the argument, first with the British people and, now, with the Tories who were once on your side.