Major EU states will block UK access to single market, warns Spain

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Influential EU states such as Germany, France and Spain will block any attempt by the UK to remain within the single market for goods without freedom of movement, the Spanish foreign minister has said.

Josep Borrell said that some smaller EU states might privately be willing to negotiate reform of the bloc’s free movement rules in order to keep easy access to UK products.

But he told The Guardian: “They will not win the battle. They have not enough power. Germany will say no, France will say no, Spain will say no.”

Mr Borrell said that Berlin and Paris were “angry” with Britain over Brexit, which he described as a “pain in the ass” which was distracting energy from issues such as immigration and eurozone reform.

This week’s summit of the European Council will focus on migration, security and the economy on Thursday, though leaders of the remaining 27 EU countries will discuss Brexit in Theresa May’s absence on Friday.

Asked how he would characterise the progress of Brexit talks since the last summit in March, European Union spokesman Margaritis Schinas told a Brussels press conference: “Average, with a potential of improvement.”

The comment came as Mrs May celebrated Royal Assent for her flagship EU Withdrawal Bill, telling Cabinet it was “a major building block for the UK’s bright future outside the EU”.

Reports suggest that plans for a future trading relationship expected to be outlined by the Prime Minister in next month’s Brexit white paper could include proposals for regulatory alignment on goods, to preserve continental markets for UK producers without tying Britain to accepting foreign workers.

The expected move comes as major companies including BMW and Airbus warn of the risk of activities being transferred to the EU if Britain leaves the customs union in a “hard Brexit”.

And London Mayor Sadiq Khan told MPs that major job losses can be expected in the capital if the Government allows service industries to “fall off a cliff edge” after Brexit.

Speaking ahead of a meeting of the EU’s General Affairs Council in Luxembourg, Mr Borrell told The Guardian: “There are many European countries who would support the (UK) idea. Because they are against free movement of people. But not the big, powerful ones.

“Spain will not accept. I don’t think France or Germany will accept that.

“They are quite angry with the United Kingdom. Because of all this mess, all the trouble created, all this time lost on negotiations. When we should be discussing eurozone and immigration, we are discussing what to do with someone who wants to leave. It is really a very bad allocation of intelligence, resources and money.”

Mr Borrell dismissed the idea of a hard border in Ireland as “impossible” and said the UK Government’s “maximum facilitation” proposal to use technology to avoid the need for customs checks would not work, leaving only the options of keeping Northern Ireland or the whole of the UK in the customs union.

Speaking to the House of Commons Public Administration and Constitutional Affairs Committee, Mr Khan said Mrs May had her “priorities all wrong” in Brexit negotiations and should give greater emphasis to sectors such as financial services, accountancy and the legal profession.

City of London warnings of 10,000 job losses in a cliff-edge Brexit were “a conservative estimate”, he told the cross-party committee.

“I welcome the Government announcing there should be a backstop agreement in relation to frictionless trade for goods,” he told MPs. “It needs to extend though to frictionless trade for services as well.

“We can’t afford that situation where after (a) transition period we fall off a cliff edge in relation to trades in services.”

Around 92% of London’s economy is made up of the service sector, the same as Manchester, while it accounts for 91% in Edinburgh, 83% in Leeds and 82% in Birmingham.

Mr Khan said: “We are already seeing major banks establishing subsidiaries in other EU countries, or moving part of their business out of the capital because EU law requires them to be legally compliant from the day the UK leaves the European Union.

Sadiq Khan
Sadiq Khan says the PM has her priorities wrong on Brexit (Kirsty O’Connor/PA)

“The result will be fewer jobs, less investment and less prosperity the length and breadth of the country.”

Mr Khan’s message was echoed by the chairman of the European Services Forum Noel Clehane, who said: “The business community requires legal certainty as early as possible.

“We therefore call on the negotiators to take all necessary steps to minimise business disruption, to provide clarity as soon as possible on the withdrawal agreement, and to allow some flexibility in the management and duration of the transition period.”

Mr Khan’s intervention came as the Society of Motor Manufacturers and Traders (SMMT) called for the Government to end uncertainty over Brexit as it said investment in the British motor industry has fallen by nearly a half in a year.

The SMMT said £347 million of investment was earmarked for new models and facilities in the UK in the first half of this year, compared with £647.4 million in the same period in 2017.

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