Ever since Theresa May declared that ‘no deal is better than a bad deal’ she has seemed to be drifting towards the ‘bad deal’ option. The government has put forward numerous constructive proposals, only for them to be shot down by Michel Barnier — who goes on to warn of ticking clocks and the need for Britain to cede ever more ground. His strategy is logical and amply rewarded: every time he rejects a British plan, more concessions are offered. All along, Barnier’s approach has been to portray a post-Brexit trade deal as if it were a favour to Britain rather than an agreement of mutual interest. Britain, he has asserted, has everything to lose — while the EU could carry on after a ‘no deal’ Brexit as if nothing had happened.
This week, the tone finally changed. For once, the UK government has talked tough, warning the EU that if British financial services are denied access to European markets, a reciprocal ban will be put in place, too. European investment funds would be denied the opportunity to do business with British investors, who constitute Europe’s largest market for its products.
The effect has been instant. Already, the EU position has begun to soften. Barnier’s conceit that the EU can simply take over Britain’s financial services industry has been shown for the wishful thinking that it is. He has been overruled by EU member states, who realise what is at stake. They do not wish to sacrifice the interests of their own financial industries for the political objective of being seen to punish Britain for daring to leave the EU. The result, it seems, is that financial services will, after all, be included in a trade deal — something which we have been told over and over again would be impossible.
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