Published: Wed, March 07, 2018
Medicine | By Earnest Bishop

'Sceptics are wrong to say banks can't be in Brexit deal'

'Sceptics are wrong to say banks can't be in Brexit deal'

Chancellor Philip Hammond has won broad support for his speech today, pressing the case for why financial services must be included in any post-Brexit trade agreement - just hours after it was ruled out.

The tough stance is partly inspired by fears that if Britain gets a bespoke deal it could inspire the 27 remaining member states to leave the European Union and demand special treatment themselves. Trying to forge a new trading relationship with our largest trading partner that does not include financial services is like building a ship with no sails.

The European Union on Wednesday rejected Britain's calls for completely free trade after Brexit, saying in its long-awaited guidelines for future ties that frictions were inevitable.

"Everyone must be aware that the United Kingdom red lines will also determine the shape of our future relationship", the former Polish premier said.

In a speech which accompanied the publication of the guidelines, EU Council president Donald Tusk said "it should come as no surprise that the only remaining possible model is a free trade agreement". "Hundreds of millions of people across Europe, from tourists to entrepreneurs to pensioners, rely on mutual market access in financial services every single day without even realising it".

He added: "A pick and mix approach for a non-member state is out of the question".

"It is possible to include financial services within a trade deal but that it is very much in our mutual interest to do so", Hammond said.

According to a parliamentary insider, who has seen the draft, the resolution notes that any "deep and comprehensive" trade deal must entail "a binding interpretation role" for the European Court of Justice and "does not allow cherry-picking of sectors".

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The European Parliament document, which may be changed before it is adopted later on Wednesday, says non-EU members - even if very closely aligned to the bloc - can not expect the same rights and benefits as EU members. "In this context, existing reciprocal access to fishing waters and resources should be maintained". "But it will only be a trade agreement", he said in a press conference.

European Commission President Donald Tusk said Wednesday that a free-trade deal with no tariffs on goods is the most Britain could aim for once it leaves the bloc.

Officials have said they expect the future agreement will be described in a written "political statement" that will accompany the formal withdrawal treaty, which must be approved by the U.K.'s official March 29, 2019 exit date.

"Every trade deal the European Union has ever done has been unique", he is expected to say, pointing to prior agreements with Turkey, Canada and South Korea.

The lack of any specific detail on these points in the draft guidelines suggests that a fierce debate could still lie ahead of how, if at all, the two sides might be able to commit to aspects of their new arrangement.

"A trade deal will only happen if it is fair and balances the interests of both sides", Hammond said in a speech in London's Canary Wharf financial center.

Prime Minister Theresa May's spokesman, James Slack, said "we look forward to seeing the final guidelines, and hope they will provide the flexibility to allow the European Union to think creatively and imaginatively about our future economic partnership". This would rely on a system of tariffs that do not adequately cover financial services.

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