EU leaders call for quick – and punitive – split
Cameron under pressure to set a date for Brexit amid warnings the UK will be barred from single market
European leaders are preparing a fast and painful divorce for Britain, aiming to inflict punitive damage on the country’s economy to prevent a domino effect. David Cameron will come under intense pressure to set a timetable for Brexit when he meets his 27 EU counterparts on Tuesday.
EUROPEAN leaders are preparing a fast and painful divorce for Britain, aiming to inflict punitive damage on the UK economy to ward off a domino effect within the bloc.
David Cameron will come under intense pressure to set a timetable for triggering Article 50, the exit clause of the Lisbon Treaty, when he comes face to face with his 27 counterparts over dinner in Brussels on Tuesday.
In line with the treaties, he will then be locked out of a day of talks on Wednesday, as leaders begin shaping Britain’s new deal.
While Jean-Claude Juncker, the Commission president, said that Britain would not be able to “cherry pick” its terms, Angela Merkel urged leaders not to be “nasty” for the sake of preserving economic ties and called on leaders to take their time. However, leaders are aware that unless there are severe costs to the British economy under the deal, other countries are likely to quit the bloc too.
“It is not an amicable divorce,” said Jean-Claude Juncker, the European Commission president. “But it was also not an intimate love affair.” He said split talks must begin “immediately”.
“There is a certain urgency, so that we don’t have a period of uncertainty, with financial consequences, political consequences,” Jean-Marc Ayrault, the French foreign minister said. In an unprecedented step, he called on Mr Cameron to resign now.
“A new prime minister must be designated, that will take a few days but there is a certain urgency,” he said.
The official Leave campaign claims they could delay by years the activation of Article 50. Mr Cameron said it would be left to his successor in October.
EU sources said that they may offer Britain until the end of the year to activate the clause, which triggers a twoyear countdown to exit. Any prevarication would result in a less favourable deal, they said.
“There are informal talks going on that say, ‘If you’re being extra tough right now, don’t expect us to be extra nice during the Article 50 negotiations,’” said an official. “Not to mention the harm you are doing yourselves right now. Just look at the outlook from the ratings agency. The British people have spoken, so what exactly are you reflecting on?”
Angela Merkel, the German chancellor, said: “It shouldn’t take forever, that’s right – but I would not fight over a short period of time.”
Mrs Merkel insisted there was “no need to be particularly nasty in any way in the negotiations”.
“The negotiations must take place in a businesslike, good climate,” she said. “Britain will remain a close partner, with which we are linked economically.”
Charles Grant of the Centre for European Reform said: “Clearly, it is reasonable to say that the UK can’t start the negotiation until we have a Govern- ment. But if we prevaricate much beyond October we will lose the goodwill of our partners, which will not be good for Britain, because we need their good will for a good deal.”
François Hollande, the French president, also acknowledged the threat that punitive terms would bring to the Eurozone. “It will be painful for Britain but like in all divorces, it will be painful for those who stay behind too.”
However, it looks increasingly likely that Britain will be locked out of the single market under a Norway-style model that would also require free movement. That would hit international banks based in London, who are able to operate in any jurisdiction in the EU – a practice known as “passporting”.
Under a text prepared by Wolfgang Schaeuble, the German finance minister, Britain would have a trade agreement, determining whether import tariffs apply to certain goods or services. However it would not grant access to the internal market. It notes the deal “should refrain from setting wrong incentives for other member states when renegotiating relations”.
Pulling financial institutions – and the vast tax revenues they generate – from London to Paris and Frankfurt would be a major prize for continental leaders. Matthew Elliott, the chief executive of the Leave campaign, insisted there was “no reason why a sensible arrangement couldn’t be put in place” to protect passporting.
Today diplomats from the 27 remaining members will meet in Brussels, ahead of Tuesday’s European Council summit. They are expected to choose areas to issue declarations on – terrorism and defence is a likely candidate – to rebuild unity and show the project is “moving on” from Britain.
“We are there, without the UK, so there will be an empty chair. But for the Commission, nothing changes,” said one source.
Diddier Seeuws, a Belgian diplomat who previously worked for Hermann Van Rompuy, has been appointed by Donald Tusk as the head of the Brexit Task Force at the European Council. He will be responsible for the haggling between the EU’s 27 remaining states.
Mr Juncker yesterday furiously attacked Mr Cameron’s conduct in office, saying he had forced the Brexit by continually attacking Brussels.
“The usual reflex is for the finger to be pointed at Brussels. Yet in this case, that is completely wrong: the referendum was called by the British prime minister.” He said he had spent “countless
‘If someone complains about Europe from Monday to Saturday nobody will believe him on Sunday when he says he is a convinced European’
days and nights” working on Britain’s renegotiation and was “very surprised” that it “played no role whatsoever” in the campaign.
“At the same time it is hardly surprising. If someone complains about Europe from Monday to Saturday then nobody is going to believe him on Sunday when he says he is a convinced European.” He said that Britain may get no new deal at all, noting that each country has a veto on its terms.
“What will be the future legal status of the millions of EU citizens in the UK and the millions of Britons on the continent? How will the exit affect thousands of British pensioners living in Portugal or Spain who will lose their access to the welfare and health systems? Fifty-three free-trade agreements, which were negotiated by the EU on behalf of all Member States, are also hanging in the balance for the UK.”
He too ruled out access to the single market. “Out is out,” he said. “There will certainly be no cherry picking.” Ukip MEPs should leave office now, he added. In the European Parliament, a resolution was tabled to strip British MEPs of their committee chairmanships.
Lord Hill, the British Commissioner who held the portfolio for financial services, resigned yesterday, saying: “What is done cannot be undone”. His replacement with Valdis Dombrovskis, the commissioner for the euro, marks the death of Europe as a multi-currency system and the beginning of what Brussels officials hope will be a whirlwind of rapid integration.
That will be met with grave alarm in Denmark, the Netherlands and Poland, who feared the loss of Britain as a bulwark against federalism.
Britain must now begin the arduous work of signing new trade deals, after adopting an independent trade policy for the first time in 40 years.
But the Government is hampered by the fact it has only 20 trade experts and will need to hire hundreds. On Downing Street’s orders, Whitehall officials made no preparations for Brexit. By contrast, European leaders and their officials have been in talks for months.
“I can assure you we will be ready and also very precise,” Donald Tusk, the European Council president said a week before the vote.
“As the Elysée Palace was preparing, Whitehall wasn’t,” said Wes Streeting, a member of the Treasury Select Committee who had questioned Mr Osborne on the preparation plans. “This is criminal.”
‘It will be painful for Britain but, like in all divorces, it will be painful for those who stay behind too’