Belfast Telegraph

David Davis 'not really interested' in Brexit transitional arrangement

Brexit Secretary David Davis is "not really interested" in seeking a transitional arrangement with the EU to ease the process of UK withdrawal, according to a leaked memo of a meeting with City financiers.

According to the document, obtained by the Financial Times, Mr Davis told representatives of the City of London Corporation (CLC) that he thought it "unlikely" Britain would stay in the European single market after Brexit, as the EU would be "inflexible" about the need to retain freedom of movement.

But he suggested Britain could secure a trade deal like the CETA agreement between the EU and Canada, which will remove most trade tariffs. The memo said he was looking for a future trading relationship "somewhere in the middle of the models for Turkey, Switzerland and Norway".

And he was quoted as saying that Britain's opening approach to the EU would be to offer "open access on all services and goods without tariffs in the UK".

A spokesman for Mr Davis's Department for Exiting the EU (DExEU) insisted that the document did not "properly reflect" his views or Government policy. The Brexit Secretary was "looking at all options" to deliver a smooth and orderly exit from the EU, said the spokesman.

Business has been pushing for a transitional arrangement with the EU to prevent a sudden "cliff edge" change in regulations and tariffs on the day when the UK leaves - probably in 2019.

CBI director general Carolyn Fairbairn told MPs this week that her members wanted "an adjustment period" to adapt to the new arrangements, and Theresa May told the organisation's conference last month that she understood their concerns on the issue.

But the memo taken by a CLC representative of the November 15 meeting with Mr Davis recorded that he was "not really interested" in the discussion around the arrangements (and) did not foresee any benefits". A transition deal "could be perceived as a delay to the process that is not something the Government can abide", the note said.

He would however be ready to consider any request from the EU for transitional arrangements, saying he would be "more in favour - I will be kind".

Mr Davis appeared to anticipate that the Supreme Court will reject the Government's appeal - heard this week - against a ruling requiring them to seek parliamentary approval before starting withdrawal negotiations under Article 50 of the EU treaties.

The memo states that he said the court case meant Article 50 was likely to be triggered in "very late March", with the Government using an "expedited process" to push a Bill through both Houses in the space of five days.

Mr Davis was reported to have said that he did not expect Germany or Spain to pose a problem in the two-year negotiations over Britain's future relationship with the EU, but said that France "would be the most hostile and difficult to compromise with".

He indicated that a mechanism was being sought to prevent Paris "pulling out the rug" on talks, according to the memo. And he said that if the EU took a hard line on "punishing" the UK, the Government was ready to adopt a position of competing with its former partners to attract businesses with lower taxes and softer regulation.

The memo described the Brexit Secretary as "bullish and not receptive to negative special pleading".

It said he played down suggestions that Brexit would lead to an exodus of bankers to alternative trading centres on continental Europe, given "the unattractiveness of Frankfurt and other cities in the EU in comparison with London". Instead, jobs were more likely to go to New York.

The DExEU spokesman said the Government was "engaging widely" with businesses about the "challenges and opportunities" of Brexit.

"These are two-way discussions about a whole range of issues and potential outcomes," said the spokesman. "This account does not properly reflect Government policy or (Mr Davis's) view.

"He has made clear that the UK wants a smooth and orderly exit from the EU, a new partnership that works in the interests of both parties, and is looking at all options to deliver that."

Prime Minister Theresa May's official spokeswoman declined to discuss the contents of the CLC memo, but said that it represented "one interpretation of the discussion".

She added: "We want to have a smooth, orderly exit from the EU."

Liberal Democrat economy spokeswoman Baroness Kramer said: "David Davis's arrogance is now threatening one of the most important parts of our economy.

"To refuse to listen to the needs of a financial services industry that contributes over £71 billion in tax is to put public services at risk. Even worse is to pretend that transitional arrangements for the City would be an act of kindness for the EU.

"We are at serious risk of losing the next generation of financial services to Frankfurt and Berlin, yet he isn't lifting a finger to stop it. Our Brexit minister should be doing his patriotic duty and fighting for UK's place as a world financial hub. "

Scottish National Party Europe spokesman Stephen Gethins said: "This leaked memo leaves absolutely no doubt that Brexit has been hijacked by the hard right of the Tory Party.

"It is unbelievable that, before negotiations have even begun, the UK Government appears to have given up on retaining membership of the world's largest single market.

"The cavalier approach that Tory ministers are taking to leaving the EU - as quickly as possible, and at any cost - shows their reckless disregard for the devastating impact that a hard Brexit would have on Scotland's economy, on businesses, families and communities across the country."