As the European commission’s chief Brexit negotiator, Michel Barnier, prepares to start work on Saturday, the dominant mood among senior diplomats is that the UK is on the path to “hard Brexit”, namely giving up membership of the EU single market, as well as the customs union that allows free circulation of goods.
Under this clean-break scenario, London-based banks would lose the passports that allow them to operate across the continent, while Britain’s trade would be governed by a new agreement yet to be defined.
Barnier, a veteran French centre-right politician, is expected to make a low-key start to his high-profile role, with no public statements scheduled on a weekend that also marks the passing of 100 days since the 23 June referendum.
He has already moved into an office in the European commission headquarters in Brussels, just a few doors down from the president, Jean-Claude Juncker. Barnier plans to visit EU capitals to take soundings on Brexit, while his team draft positions on trade, foreign policy and the budget – the issue expected to be the most bitterly contested.
Meanwhile, British officials have warned their counterparts that the EU risks a messy break-up with the UK unless informal talks take place before official negotiations. But British overtures have been rebuffed, as EU27 diplomats stick to the line of “no negotiations without notification”.
The terms “hard” and “soft Brexit” have no formal meaning, but have filled the vacuum that has emerged as EU leaders wait for the UK to spell out what future relationship it wants with the bloc.
One senior European diplomat told the Guardian that a hard Brexit was inevitable because it was “hardwired into the referendum”.
The source said the Brexit vote showed that the UK wanted to reduce EU immigration, stop paying into the EU budget and strike trade deals with countries, thereby abandoning the EU’s customs union. “If you don’t want to pay into the EU budget and make free-trade agreements with third countries, then you are completely out,” they said.
Avoiding hard Brexit would mean “you would have to give up some central planks of the referendum and there is no way that will happen”, the source said.
Those expectations appeared to be vindicated when Liam Fox, the trade secretary, dropped another heavy hint that he favoured a clean break with the EU. In a speech on Thursday he suggested he was leaning towards trading on World Trade Organisation terms, rather than being part of the EU single market. Brexit gave the UK “a golden opportunity” to forge a new role in the world, he said.
The prime minister, Theresa May, has so far refused to back Fox’s call to leave the EU customs union, sowing confusion in Europe about what the British government wants.
Another senior European diplomat told the Guardian the current temperature pointed to a hard Brexit, although they cautioned things could change once the two-year period of formal negotiations began. “For the time being the big problem in the process is that the [British] political class have no idea what they want.
“I am appalled to see that politicians with a mandate do not fully realise the meaning of what they are saying,” the source said. “There is not much to negotiate because you need to know what you want.”
European politicians have been dismissive of some British ministers’ statements on Brexit, for example repeated claims from the foreign secretary, Boris Johnson, that the UK could be part of the single market without free movement.
EU officials are also disappointed that May did not reveal detailed plans during recent meetings with Donald Tusk and Martin Schulz, presidents of the European council and parliament respectively. “I thought we would have got a little more from the PM,” said one source. “Whether she is keeping her cards close to her chest, or there isn’t a lot of substance, we don’t know.”
One senior German MP and member of Angela Merkel’s governing party said Berlin was “getting less impressed with Theresa May by the day”, because the prime minister had avoided any hint of where she was heading, while at the same time allowing Johnson and other Brexit ministers to voice “crazy” demands.
As pressure grows, the prime minister is ploughing through hundreds of pages of briefing papers on all aspects of EU policy. After six years at the Home Office, she knows justice and home affairs inside out, but is having to learn at speed the intricacies of the customs union and the impact of Brexit on 38 economic sectors. She wants to master the detail before revealing her hand, an approach closer to Gordon Brown than to her immediate predecessor, David Cameron.
Downing Street has rejected the EU’s “interpretation” that May will trigger article 50 in January or February next year.
But there is growing consensus among the rest of the EU that Brexit must take effect by spring 2019, ahead of European elections in May or June that year. This would require May to send the article 50 letter in spring 2017 at the latest.
In the absence of article 50, both sides are in a phoney war, with a growing standoff over when to begin the talks.
“There is a lot to lose on both sides,” said André Sapir, a former economic adviser to the European commission president.
The Belgian economist has written a paper with four influential European policymakers calling for “a continental partnership” that would allow Britain to remain part of the single market without having to accept complete free movement of people. The price of access to an outer EU tier would be contributing to the EU budget and following EU regulations.
The paper has caused consternation in Paris, Berlin and Brussels. One senior source described it as “the full cherry-picking approach” and “politically, a non-starter”. British Eurosceptics would also object to paying into the EU budget and accepting the writ of the European court of justice.
The polarised reaction underscores the immense complexity of forging close ties with the EU, while remaining outside. Sapir conceded the thinktank’s “soft Brexit proposal” was “at the moment unacceptable for some in the UK and unacceptable for some in the EU”.
“I still see the ‘hard Brexit’ as the most likely scenario,” he said. “Both sides have cards in their game that can damage the other.”
Author: Jennifer Rankin