Brexit Bulletin: How Will It All End?

  • PM May's Cabinet due to meet to discuss Brexit "end state"
  • EU negotiator Barnier insists on no special deal for the City

May's Core Brexit Team Meets to Talk EU Trade Deal

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Just as Theresa May’s key ministers start to unite behind a Brexit policy, the European Union is hardening its own negotiating position.

May’s core Brexit team met on Monday to discuss what kind of trade deal the U.K. will seek from the European Union when talks start early next year. It’s an issue that divides her ministers, and it has taken until now for them to start discussing the so-called “end state” of the divorce. While that that may soothe rifts in the Cabinet it’s unlikely to inspire confidence in Brussels, Bloomberg’s Robert Hutton and Svenja O’Donnell report.

There was support at Monday’s meeting for the idea that the U.K. should make the most of the fact it starts off with all the same rules as the EU, and then selectively move away from some of those regulations, according to a person who was present. Regulations are key to trade deals: It’s the harmonization of rules in the EU’s single market that allows goods and services to move freely.

There was no argument at the 90-minute meeting, according to the person who was present. The full cabinet will discuss the issue for the first time on Tuesday. Chancellor of the Exchequer Philip Hammond, who campaigned against Brexit and has argued in favor of maintaining close ties to the bloc, wasn’t opposed to shifting away from EU regulations in some areas, such as technology, according to another official. His difference with Foreign Secretary Boris Johnson, a keen Brexit cheerleader, was on the question of whether to seek distance for its own sake.

Foreign Secretary Boris Johnson heads into 10 Downing Street on Monday.
Photographer: Chris J. Ratcliffe/Bloomberg

Still, just as there were signs of harmony in the cabinet, EU Chief Negotiator Michel Barnier sent a reminder that May faces opposition beyond her own lawmakers. Barnier used an interview with the Guardian newspaper published late on Monday to rule out a special carve-out for the U.K. financial services industry, warning that Britain will have to abide by any new rules drawn up by the EU during a transition period after leaving the bloc.

His comments, which underline the EU’s determination not to let the U.K. enjoy the benefits of membership after leaving, come 18 months after the referendum and as May is still seeking a path to Brexit that doesn’t increase divisions in her fractious Conservative Party. Until now she has avoided formal discussions about the end state, even in private.

It’s not yet clear what the EU side might think of the proposal to gradually move away from full alignment as and when it suits the U.K. There’s a risk Brussels would consider it the kind of “cherry-picking” approach that it has long rejected, and, if the bloc says no, Cabinet tensions could re-emerge.

Brexit Latest

2020 Vision | The EU expects the U.K.’s post-Brexit transition period to last until the end of 2020 and is aiming for a trade deal to kick in immediately after that, according to a European Commission official.

Bearish Business | Almost two-thirds of British businesses say changes in the labor market will make the nation a less attractive place to invest over the next five years, according to the Confederation of British Industry. The figures highlight a growing pessimism about the U.K.’s outlook – the equivalent figures for 2015 and 2016 were 25 percent and 50 percent respectively. 

No Empty Shells | The European Central Bank has reminded London-based banks it will be paying “special attention” to their relocation plans to avoid the establishment of any empty shell offices inside the EU after Brexit. 

Polish Worry | Brexit presents a bigger threat to the inflow of EU assistance to Poland than Warsaw’s escalating conflict with the bloc over democratic values, according to the government official in charge of funds absorption. 

Death After Brexit | Irish undertakers are wondering what the next life will bring. Rodney Edwards reports from near the town of Cavan, where Michael Leydon carries bodies across Ireland’s invisible border in his jet-black hearse. The journey back and forth to Northern Ireland, part of the U.K., has been straightforward and required little paperwork for most of Leydon’s career. With Cavan poised to become a frontier town again, he’s now worried that’s about to change dramatically.

And Finally...

Brexit means Brits are getting less bang for their buck this Christmas.

The cost of the Crackertoa, rated by the Independent newspaper as its top cracker (because of its unusually loud bang and burst of confetti, if you want to know) rose 50 percent this year to £18 for a pack of six at John Lewis. (It’s now on sale for £14.)

The reason? The products are made in South Africa, where the rand was trading at 24 to the pound when retailer John Lewis ordered its 2016 stock. When the retailer placed its 2017 order, one year – and a Brexit vote – later, the pound bought less than 17 rand.

Crackertoas for sale on the John Lewis website.

Emma Ross-Thomas is away.

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