Britain will lose the benefits of the European single market and its financial sector will lose the “passporting” arrangements which allow them to operate in the remaining EU as a result of Brexit, Brussels’ chief negotiator Michel Barnier has said.
Mr Barnier told a conference in the Belgian capital that the EU wants to offer its “most ambitious free trade agreement” to the UK, but warned that there was no question of Britain “cherry picking” elements of the single market which it wanted to keep.
He warned that national parliaments in the remaining 27 states, as well as the European Parliament, could block any future trade deal if the UK indicated it was planning to move away from EU standards of regulation on issues like food safety, workplace protections and the environment.
With Theresa May and key Cabinet ministers due to meet later on Monday to discuss the UK’s Brexit “divorce bill”, Mr Barnier said that it remained his priority to “settle the accounts accurately” before moving on to trade talks.
And, in a speech to the Centre for European Reform thinktank, he said it was for the UK to “come forward with proposals” for how to avoid a hard border between Northern Ireland and the Republic, raising the possibility that different rules could be applied in Northern Ireland and the mainland.
Mr Barnier used Mrs May’s old catchphrase “Brexit means Brexit” as he dismissed the “contradictions” of Leave supporters who argue that Britain can continue to enjoy some of the benefits of the single market while ditching its core principle of freedom of movement.
Pointedly noting that “the UK knows the rules” because it had a part in drawing them up, he insisted that the principles of the market were “non-negotiable”.
He added: “We take note of the UK decision to end free movement of people. This means, clearly, that the UK will close the benefits of the single market. This is a legal reality.”
While UK-based financial services companies may be able to operate in the EU post-Brexit on the basis of “equivalent” regulations, they will “lose their European passport” and any future agreements will be subject to the proviso that Brussels will “never compromise on financial stability”, said Mr Barnier.
He rejected suggestions that the UK will continue to be able to benefit from the work of European agencies, arguing that “freedom implies responsibility for building new UK administrative capacity”.
And he dismissed the argument that Northern Ireland must maintain the same regulations as the rest of the UK, pointing out that more than 100 areas of cross-border co-operation already exist.
“I expect the UK, as co-guarantor of the Good Friday Agreement, to come forward with proposals,” he said.
“The island of Ireland is now faced with many challenges.Those who wanted Brexit must offer solutions.”