EU Warns 'Negative Economic Consequences' For UK As It Reveals Plan For Brexit Trade Deal

'There can be no cherry picking.'

The European Union has warned Theresa May her approach to Brexit will lead to “negative economic consequences” as it ruled out special market access for certain parts of the UK economy.

Donald Tusk, the president of the EU Council, said on Wednesday it should come as “no surprise” that the “only remaining possible model is a free trade agreement” similar to the one struck with Canada.

Speaking at a press conference in Luxembourg, he said Brexit inevitably make UK-EU trade “more complicated and more costly”.

“No member of state is free to pick only those sectors of the single market it likes,” he said. “A pick-and-mix approach for a non-members state is out of the question.”

He added: “I fully understand and respect Theresa May’s political objective to demonstrate at any price that Brexit could be a success and was the right choice. But sorry. It is not our objective.”

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In draft guidelines for the future relationship leaked to POLITICO, Brussels said it wanted a “close as possible a partnership with the UK”.

But the document warned the prime minister’s decision to pull the Britain out of the single market and customs union had consequences.

May has argued British financial services should be given special access to the single market as part of an “ambitious” trade deal.

The EU has said while its proposed deal would see “zero tariffs” on goods - market access for services will be granted only “to an extent”.

“The European Council has to take into account the repeatedly stated positions of the UK, which limit the depth of such a future partnership,” the document said.

“Being outside the customs union and the single market will inevitably lead to frictions.

“Divergence in external tariffs and internal rules as well as absence of common institutions and a shared legal system, necessitates checks and controls to uphold the integrity of the EU Single Market as well as of the UK market.

It added: “This unfortunately will have negative economic consequences.”

The EU repeated its position that there can be no “cherry picking” by the UK which would give it participation in the single market on a sector-by-sector basis.

“That would undermine the integrity and proper functioning of the single market,” the EU document said.

In response to the document, Downing Street said: “This is a draft text, a text that has not been formally published, but has been circulated to the EU27 for comment.

“We look forward to seeing the final guidelines when published and hope they will provide the flexibility to allow the EU to think creatively and imaginatively about our future economic partnership.”

Asked if the UK would now try to get other EU states to influence Brussels, the prime minister’s spokesman added: “We engage with European colleagues regularly.”

In a speech today, Chancellor Philip Hammond will argue financial services can and should be part of a trade agreement between the UK and the EU.

It comes as the Commons International Trade Select Committee warned UK trade with at least 70 countries could fall off a “cliff-edge” after Brexit.

In a report published on Wednesday, the committee called on the government to do more to make sure the trade deals the UK enjoys through its EU membership continue after March 29 2019.


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