Theresa May must still be prepared to call the EU’s Brexit bluff

As the Brexit ‘war cabinet’ meets this morning to discuss what future trading relationship Britain would like with the EU there is a grim inevitability about the next few months. We know what we want – free trade with the EU, in services as well as goods, as well as free trade with the rest of the world. The EU, as it has made clear in recent days, has other ideas. Its plan is to allow us a Canada-style deal – a free trade deal in goods but not services, something which will be completely unacceptable to Britain, with our financial services-dominated economy. Moreover, it is going to try to impose punitive tariffs on British imports wherever it feels that UK regulation is unhelpful to EU industries. Given the EU’s clear victory in round one of the negotiations, in which we agreed to pay the EU’s leaving bill without guarantee of anything in return, Michel Barnier and his team are going to feel pretty confident of victory in round two as well.