British Business On Brexit: What Companies Said

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If things had gone Theresa May’s way, this would have been the week when Brexit negotiations moved decisively ahead, as the EU approved the beginning of crucial talks on transition.

Instead, the British prime minister’s prospects at this week’s EU summit are far less promising, because of a tough Franco-German line on the progress made by the talks so far.

“We hit the wall,” said one senior British official.

While many past EU confrontations featured an Anglo-French fight mediated by the Germans, this time Britain appears to be pitted against a hardline Berlin, with Paris giving little solace to London.

That raises a question for Mrs May’s aides and Michel Barnier, the EU’s chief negotiator: why is Germany being so tough on Brexit?

The UK’s expectations were very different when Mrs May gave a set piece speech in Florence in September to try to break the impasse in the Brexit negotiations.

Her team was convinced the offer of payments of €20bn or more would at least be enough to convince the EU to start talks on a transition period. Indeed, Mr Barnier also raised the option with EU ambassadors earlier this month as potentially the best way forward.

But Germany and France have made clear their opposition to such a path — despite the urgency of the issue for the UK.

Several senior diplomats say Berlin has played an important role in rallying EU backing for its divorce-first approach.

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Instead of giving a green light to talks on transition, the current draft of the EU’s summit conclusions offers more limited encouragement: a pledge to be ready for trade and transition talks by the end of the year, if Mrs May offers sufficient concessions.

In the words of one Elysée adviser, the “absolute requirement” is reaching a divorce settlement before talks about post-2019 relations begin. In substance it falls well short of Britain’s initial expectations.

UK hopes that Angela Merkel might ultimately take a softer line have so far proved misplaced, although nobody rules out the possibility of last-minute dealmaking. One diplomat familiar with recent exchanges between Mrs May and the German chancellor called them “frosty”, particularly over Britain’s financial commitments to the EU.

The impasse is a far cry from the predictions of some Brexiters, who argued that Berlin’s need to preserve UK market access would guide its approach. But the German government has given priority to defending what it sees as the EU’s collective interests, over and above relations with London.

“We can’t make any compromises when the EU’s very existence is at stake,” said Axel Schäfer, head of the Social Democrats’ Brexit task force. “The EU is united on this. We have to defend our existence, the existence of the EU.”

German officials insist the country is still committed to a close relationship with the UK after Brexit. Bloomberg reported this week that the foreign ministry had prepared a draft paper calling for a “comprehensive free-trade accord” with Britain. But the document has reportedly not yet been approved by the chancellery and is still being circulated among ministers. On the sequencing of the talks, Berlin is sticking to its tough position.

Ms Merkel has for some time warned EU leaders that October may be too early to move on Brexit. Other EU diplomats also think France and Germany see no harm in prolonging economic uncertainty that may make UK-based companies move to the continent.

“The Germans are very focused on the money and do not appear too bothered about the impact on British politics of their holding out,” added Charles Grant of the Centre for European Reform, a think-tank. “They are convinced a firm line is in the EU’s interests.”

Even when it comes to a transition, German business groups see little merit in attempting to entice the UK to settle its divorce issues. “You have the impression that the real negotiations are inside the British government, rather than between the UK and EU,” said Joachim Lang, managing director of the BDI, Germany’s leading business body. “And there’s little point in trying to intervene in what is essentially an internal UK debate.”

Officials in Berlin often cite the negotiations between former UK prime minister David Cameron and other European leaders before the Brexit referendum as a cautionary tale. He won some concessions, such as a four-year ban on new migrants being able to claim in-work benefits. But that cut no ice with the hardline Brexiters.

The Germans feel concessions to Mrs May would go the same way.

“The anti-Europe tabloids won’t accept the idea of a transition anyway, because it’s an extension of a regime they don’t like,” said one official.

Pascal Lamy, the former EU commissioner and World Trade Organization director-general, sees Britain still struggling to come to terms with being the junior partner in defining Brexit.

“The fundamental difference between the UK vision of what this is about and the Franco-German view is that the British still think this is a negotiation.” he said. “It is not a negotiation. It is a process to be managed to minimise harm. It involves adjusting.”

“They still seem to believe they can buy something with the money they have to pay,” he added. “The truth is there is nothing to discuss . . . The only question is how much do you owe.”

This is source I found from another site, main source you can find in last paragraph

Source : https://www.ft.com/content/ef9ba0f0-b40e-11e7-aa26-bb002965bce8

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