Barnier: EU will offer Britain a deal ‘such as there never has been’

We should not pretend that the only alternative to crashing out of the EU is yet more concessions

THE EU’S chief Brexit negotiator said he will offer the UK a trade deal “such as there never has been” in comments that prompted the value of the pound to rise.

The EU has long insisted that the UK would not be able to strike a bespoke deal. But Michel Barnier told reporters in Berlin that the EU was prepared to offer the UK a unique arrangement.

It came as Dominic Raab, the Brexit Secretary, suggested the UK would pay the Brexit bill, estimated at £39billion, even if Britain left the EU without a deal. But Mr Raab said a disorderly Brexit was likely to affect the speed and size of payments made to the EU.

Brexiteers have insisted the payment must be linked to a trade deal.

Mr Barnier’s remarks yesterday will provide Theresa May, the Prime Minister, with an unexpected boost.

However, while his comments may be seen as a thawing in the EU’S hardline position, Mr Barnier did restate that Britain will not be granted “à la carte” access to the single market. He said: “We are prepared to offer Britain a partnership such as there never has been with any other third country. We respect Britain’s red lines scrupulously. In return, they must respect what we are. Single market means single market … There is no single market à la carte.” The pound-to-euro exchange rate was trading almost one per cent higher after the comments.

Meanwhile, Mr Raab said he was “confident that a deal is within our sights” as he gave evidence to the Lords EU committee ahead of fresh talks with Mr Barnier tomorrow. Mr Raab said: “I don’t think it could be safely assumed on anyone’s side that the financial settlement as has been agreed by the withdrawal agreement would then just be paid in precisely the same shape or speed or rate if there was no deal.”

French President Emmanuel Macron was also reportedly softening his position to Mrs May’s Chequers proposal, it emerged last night in a bid avoid a “No Deal” scenario.

Remainers may not have noticed but the European Union is suffering from a sickness that has grown worse since the Brexit vote two years ago. Hungary and Poland are governed by illiberal populists. The far-right sits in governing coalitions in Austria and Italy. In 10 days, Rightwing populists are expected to surge in the Swedish elections. Nationalists have prospered in elections across Europe including the Czech Republic, Denmark, Finland, France, Germany and the Netherlands. And the trend is likely to continue this year and next in elections to national parliaments and the European Parliament.

The liberal Europe dear to British Remainers is dying. Its leaders, however – elected government heads and the unelected panjandrums in Brussels – continue as before. France demands fiscal integration, Germany insists on migration quotas and Brussels continues its uncompromising approach to Brexit.

The Prime Minister always knew that her Chequers plan – problematic as it is – was only an opening pitch that would not survive its first contact with the EU negotiators. By proposing a customs policy that makes an independent trade policy unlikely, tying Britain to EU laws, and following the rulings of the European Court of Justice, Chequers erased the Government’s red lines, caused the resignations of David Davis and Boris Johnson, and set the Conservative Party ablaze.

But Chequers was never going to be acceptable to the EU, because it drives a coach and horses through its core principles. It seeks to cherry pick the rights ministers have decided they want – so far, de facto membership of the single market in goods – without accepting corresponding obligations, such as the free movement of people.

So we know what will come next. The EU will say that Britain must make further concessions, including accepting free movement rules, significant annual payments to Brussels, and, perhaps, EU rules for services. If the Government concedes these demands, Britain will, legally speaking, leave the EU next March, but we will be under its control and find ourselves in the worst of both worlds. If no deal is better than a bad deal, as the Prime Minister reiterated this week, Chequers Minus is a bad deal.

The danger is that the PM, having expended so much political capital on Chequers, will feel unable to diverge from the course she has set. But even if she does, Remainers in the Cabinet, notably the Chancellor, will try to impose further compromises. If that happens, Britain’s negotiating position will be well understood in Brussels: any deal, we will be saying, is better than no deal.

The signs are troubling. The Government’s no-deal planning papers framed a choice: an orderly Brexit through whatever withdrawal treaty ministers negotiate, or a chaotic Brexit if there is no deal. Philip Hammond’s letter to his fellow Remainer Nicky Morgan, in which he warned of a sharp reduction in GDP and a massive increase in government borrowing, was unauthorised but it reinforced the message. Like the rest of his tenure as Chancellor, it was a poor imitation of what George Osborne would have done.

But when Brussels rejects Chequers, the choice facing Britain is not between Chequers Minus and no deal: ministers can revert to the more conventional trade agreement envisaged in David Davis’s abandoned White Paper. This approach – unlike Chequers – is consistent with Theresa May’s original Lancaster House vision, and, subject to negotiations relating to mutual recognition of standards, consistent with the EU’S principles.

There is no reason, therefore, why a trade agreement cannot be agreed if the Government rejects further EU demands for concessions. The withdrawal treaty could still include a transition period, a binding commitment to a trade agreement more ambitious than the EU’S treaty with Canada, and – conditional upon the ratification of the trade agreement – Britain’s full exit payment.

To concentrate the negotiators’ minds, however, the Prime Minister should spell out now what Britain would do in the unlikely event that Brussels still refused such a deal.

Because a mercantilist threat to restrict trade to damage Britain would not be the act of a friend, she should say we would review our security and military commitments in Europe. She should say Britain would maintain the lowest corporation tax rates in Europe, lower even than Ireland’s. She should promise to use our freedom from EU rules to expedite trade talks with the US, the Trans-pacific Partnership countries and other markets. And she should say we would repeal the EU’S innovation-killing precautionary principle and other specific regulations. According to the Commission, if we escaped just seven EU regulations, British firms could save €6 billion per year.

We should not be glib about a no-deal Brexit. It will be disruptive and painful on both sides of the Channel. But neither should we pretend that the only alternative to no deal is Chequers Minus. It is time to show some fight, and do a deal true to what Britain voted for two years ago.