Brexit Britain faces ‘huge bill’ for market access
PHILIP HAMMOND last night refused to rule out making substantial payments to the EU after Brexit in order to secure market access for British-based financial service firms.
Asked during a trip to Berlin whether the UK would be prepared to pay for access to the EU markets for City firms, the Chancellor was pointedly noncommittal. “We will talk about all of these things,” he said.
The question of UK payments emerged after Bloomberg, the news agency, reported that Germany would demand “substantial” payments to EU budgets in exchange for market access as part of any “deep and comprehensive” trade agreement after Brexit.
Mr Hammond’s implicit acknowledgement that the UK may well need to “pay to play” in Europe after Brexit is likely to inflame passions among Brexiteers who have repeatedly warned such payments would be unacceptable.
Theresa May promised last year in a Lancaster House speech that the “days of Britain making vast contributions to the European Union every year will end” after Britain quits the bloc.
However trade experts warned that such payments may be unavoidable if the UK wants the “high levels of access for goods and services” that Mr Hammond demanded in a speech last night at the Die Welt economic summit.
Joe Owen, senior researcher at the Institute for Government, and co-author of a new report on the UK’S trade options after Brexit, said demands for budget contributions from the EU were to be expected.
“If you look at other EU deals, then the EU is likely to request some contribution in exchange for ‘deep and comprehensive access’ – in the same way EEA states, like Norway, contribute to EU development funds.”
The German position on trade talks emerged after The Daily Telegraph revealed that Angela Merkel, the German chancellor, was firmly against the UK idea of “managed divergence” from the EU, believing it amounted to the UK wanting to “have its cake and eat it”.
According to Bloomberg, German officials said that the UK must choose between the Swiss or Norwegian models if financial services are to be included in any post-brexit trade deal.
In a combative speech in Berlin, Mr Hammond confronted the Franco-german hard line on Brexit, warning Brussels that it must stop trying to “punish” Britain for leaving the EU.
He told German business leaders that the EU has so far been silent on what it wants the future relations with the UK to look like, but that inputs would be required on both sides.
Mr Hammond said: “They say ‘it takes two to tango’: Both sides need to be clear about what they want from a future relationship. I know the repeated complaint from Brussels has been that the UK hasn’t made up its mind what type of relationship it wants. But in London, many feel that we have little, if any, signal of what future relationship the EU27 would like to have with a post-brexit Britain.”