Foreign secretary Jeremy Hunt yesterday urged the European Union's two biggest economies to push Brussels' negotiators towards a sensible Brexit agreement.
"France and Germany have to send a strong signal to the Commission that we need to negotiate a pragmatic and sensible outcome that protects jobs on both sides of the Channel because for every job lost in the UK, there will be jobs lost in Europe as well if Brexit goes wrong," Hunt said.
City A.M. understands that government ministers will spend much of August using one-to-one meetings with EU counterparts to press the case for a close deal on financial services.
There are fears in Whitehall that the Commission has been deliberately misconstruing the UKs official position on financial services in order to maintain opposition to the Brexit plan agreed at Chequers last month.
Read more: UK tells Brussels it can control market access after Brexit
Senior figures including Hunt and chancellor Philip Hammond have been among those clarifying the stance adopted in the government's Brexit white paper. Some people on the UK side believe EU chief negotiator Michel Barnier wilfully misrepresented it following publication, claiming it threatened the EU's red lines, City A.M. understands.
Ahead of the Chequers summit ministers were encouraged to meet their counterparts throughout the summer, but were reportedly warned by Theresa Mays Europe adviser Olly Robbins that such meetings would not prove to be a “silver bullet” when it comes to negotiations with the EU.
However, they upped the ante after the white paper was published. City A.M. understands that Barnier told EU ministers that the UK's proposed model cannot be adopted, a move which Downing Street interprets as a refusal to budge from his insistence that any deal must be based on an existing model. Barnier's intransigence has led directly to the renewed push by UK ministers to appeal directly to EU ministers – over the head of the EU chief negotiator.
The government had used the document to drop calls for mutual recognition of financial services regulations, which was seen as too challenging for negotiators. Instead it called for an "expanded equivalence" model after leaving the EU, describing it as a “reciprocal recognition of equivalence”.
Read more: UK fights Brussels' rejection of City's post-Brexit model
This was envisaged as a “new economic and regulatory arrangement based on the principle of autonomy for each party over decisions regarding access to its market”.
While City figures have concerns over how sufficient equivalence would be, government sources have insisted the model would be a vast improvement on existing frameworks, but one which safeguards both sides ability to unilaterally withdraw access.
An HM Treasury spokesperson said: “Last week we held positive discussions with the European Commission on our proposal for a pragmatic new arrangement for financial services after we leave the EU.
“We found common ground in recognising both the EUs and UKs desire to have control over their own decision making, and the need for bilateral dialogue and co-operation to reflect the deeply integrated nature of UK and EU financial markets.
“More work needs to be done, and we look forward to further discussions.”
The Commission did not respond to requests for a comment.
[contf]
[contfnew]
CityAM
[contfnewc]
[contfnewc]
