UK threatens to starve EU of cash as Brexit fury reaches boiling point (Image: Getty)As the eighth round of talks is set to begin this week, frustr
UK threatens to starve EU of cash as Brexit fury reaches boiling point
As the eighth round of talks is set to begin this week, frustration in Downing Street at the EU’s stalling tactics is reaching boiling point.
The UK negotiating team led by David Frost have warned if talks in London make no progress this week then it will be too late to make a deal.
And the preparation for a no deal has been ramped up with the “brightest and best” civil servants brought into a new Transition Hub.
A senior Downing Street source said that they have been “resigned to Australia rules for some time” as the probable outcome, meaning that there is little confidence the EU will agree to a fair trade deal which would be acceptable to the UK.
However, there are signs that leading figures in the EU are beginning to panic about the prospect of no trade deal and loss of free access to the world’s fifth biggest market amid reports that chief negotiator Michel Barnier has been sidelined.
Mr Barnier has led a strategy which has seen progress on other areas blocked until Britain gives in on accepting EU “level playing field” regulations and allowing access to British fishing waters.
A survey by OnePoll for the Sunday Express this week shows that more than 50 per cent of members of the British public asked think that compromising on EU regulations and fish is unacceptable.
The UK team led by David Frost has refused to accept the demands and have been pushing for a deal similar to the one the EU recently struck with Canada.
A Downing Street source told the Sunday Express this week: “We just don’t get why they think they can do one type of deal with Canada and not offer Britain, which shares most of its regulations already, the same deal. It just is completely unreasonable.”
EU’s chief negotiator Michel Barnier
They were also said to be “completely bewildered” by a rant from Mr Barnier this week saying that British coastal waters would be sovereign but the fish in them would not be.
“We don’t know what he was trying and who he was really talking to,” said the source.
The Sunday Express has learnt that a dossier is being considered by Downing Street proposing that the EU could be punished for refusing to strike a deal by limiting access to being able to raise money on the London financial markets.
A source has told the Sunday Express that the threat is “set to become a big issue at the end of this week” and “it is currently on the Prime Minister’s desk being considered.”
The nuclear option drawn up by senior Brexiteer economists would put the squeeze on major corporations based in the EU who raise trillions of euros on the London markets each year.
The combination of different financial rules in the UK and toxic debt in the EU means that they are forced to go to London or New York for equity.
With 117 major EU companies listed on the Stock Exchange, the economists behind the dossier believe it is a “magic key” to unlocking a trade deal while regaining full sovereignty.
One of the economists behind the proposal, Barney Reynolds, global head of the Financial Services Industry Group, a partner at Shearman and Sterling said: “We should warn the EU that if they refuse to play ball in the talks, we will scrap our protective shield and rectify the dumping and unfair subsidisation in the way that best protects us.
The UK negotiating team led by David Frost have warned if talks in London make no progress this week then it will be too late to make a deal
“They would then confront had choices. Either pay a lot more for the billions they need from London’s global markets or face being starved of cash for their big investment projects.
“It is time to make clear to Michel Barnier and others that there is a high price to pay for their refusal to engage with the UK’s fair and reasonable proposals for a win-win future relationship.”
He added: “Every indication is that the EU is keen to have a deal. They would prefer one that damages the UK – were the UK to agree to that – but when it becomes clear this option is not available, discussions will normalise rapidly.”
Meanwhile, sources from Mr Frost’s negotiating team have described this week’s talks as “crucial” with time now running out to strike a deal.
A source close to the UK’s chief negotiator pointed out that the UK and EU are entering the final phase of negotiations and while the government wants to reach a deal with the EU there needs to be a new approach from Brussel.
The source said: “If we’re going to get there, we need more realism from them on the scale of the change that results from our departure. They need to realise that what they’re asking for is at odds with what the British people voted for, twice, and not something we could ever accept.”
The biggest problem remains a self-imposed doctrine of “parallelism” which the Commission is using to stall progress by refusing to settle the simplest issues first, despite our willingness to up the pace and get into the detailed discussions of legal texts.
The EU have refused our offer to allow them to share our consolidated text with member states, wasting opportunities to make progress at this critical stage.
The source close to the negotiations said: “We intensified the talks in July in order to reach a broad outline of an agreement this summer.
“Due to the EU’s repeated refusal to accept that in key areas we need to do things in our own way, reflecting our new status as a sovereign, independent country, those difficult discussions are ongoing. We now face a critical round of negotiations in London.
“We will continue to set out our reasonable arguments, which have remained the same since talks began in February – that we want an agreement based on precedent. It’s time the EU accepted that so we can move on.
“The EU must also realise that we are serious about leaving with an Australian style-trading relationship and reclaiming our independence as a sovereign nation if we cannot find acceptable terms.
“The whole Government has been extensively preparing to ensure that businesses and citizens are ready for the end of the transition period in any scenario. Outside the customs union, outside the single market and outside the EU.”
A Whitehall source added: “For four years now we have been clear that our sovereignty is non-negotiable – and our status as an independent country will not be compromised. This is what the British people voted for and is something we will deliver on 1 January 2021, regardless of the outcome of negotiations.”
The EU have refused our offer to allow them to share our consolidated text with member states
In a sign that the government is serious about preparing for ending the transition period on Australia terms, work on readiness is being ramped up at the centre, with officials across departments working at pace on our preparedness.
To coordinate this huge body of work, a new No 10 Transition Hub has been created, drawing the best and brightest officials from across Whitehall.
Situated directly above the new No 10 unit in 70 Whitehall, it is tasked with having a central grip on transition work, working closely with Michael Gove and the Cabinet Office.
The new unit will be staffed by civil servants in the office, with the use of live data.
Meanwhile, the UK is gearing up for trade deals around the world with former Australia Prime Minister Tony Abbott confirmed as one of the trade envoys on the new board of trade.
After Prime Minister Boris Johnson came out in support of the 62-year-old, Mr Abbott – who led Australia from 2013-15 – said he was “only too keen” to help the UK and looked forward to helping facilitate trade deals “between Britain and other countries, including Australia”.
“A UK-Australia trade deal, maximising the movement of goods, services and people is clearly in the best interests of both our countries,” Mr Abbott said in a statement on Twitter.
“It’s important for the wider world that Britain make the most of its post-Brexit opportunities and I am proud to be playing a part.”
“My government finalised trade deals between Australia and China, Japan and Korea. I’m looking forward to bringing that expertise to bear as Britain works towards mutually beneficial improvements with its major trading partners.”