By Geoffrey Smith
December 19, 2017

If this is the season of peace and goodwill to all men, nobody has told Michel Barnier.

The man tasked by the EU to lead the bloc’s discussions with the U.K. over ‘Brexit’ has been rehearsing his Grinch imitation, pouring cold water over the brief uptick in optimism that followed a summit last week that formally blessed the advance of talks to a new, second stage.

Brexit Secretary David Davis tried to get that second stage started by calling for an ambitious deal that would encompass services as well as goods. That’s particularly important for the U.K. economy because its financial services industry is by far the largest in Europe, and much of it depends on access to the EU’s Single Market.

But in an interview with a handful of European newspapers including The Guardian, Barnier said the U.K. shouldn’t expect the financial services a sweet deal.

“There is not a single trade agreement that is open to financial services,” Barnier said. “It doesn’t exist.”

Read: Here’s What the U.K. and EU Just Agreed To in the Brexit Deal

He went on to say that the U.K.’s problems were of its own making. Under Single Market rules, a financial institution authorized to do business in one member state can operate in all 28 member states, an arrangement known as “passporting.” However, the U.K. wants to leave the Single Market because it also requires states to accept unimpeded free movement of people—and the Brexit vote was, to a large degree, a vote to cut immigration.

“In leaving the single market, they lose the financial services passport,” Barnier said.

Barnier’s comments reflect the EU view that its regulatory standards—and its enforcement mechanisms—should dictate all future relations between the two.

Read: A Brexit ‘Transition Deal’ Is Urgently Needed to Ease Separation From the E.U., British Lawmakers Say

“We will not accept from the other side regulatory competition against social rights, against environmental rights, against consumer rights and against fiscal regulations … Or against financial stability,” The Guardian quoted him as saying.

On Monday, one of Barnier’s senior advisers, Stefan de Rynck, had also thundered against what the EU sees as British “cherry-picking”—a desire to want all the upside of market access with none of its obligations.

Read: The U.K. Is Spending $4 Billion Just to Get Ready for Brexit

However, the EU’s own rule book is itself the product of decades of such “cherry-picking.” What claims to be the world’s largest single market is shot through with regulation that protects favored players in sectors such as banking, utilities and transport. At an energy summit meeting Monday, the EU yet again watered down an initiative to end the regulation of electricity prices and gave grid operators powers to stop new entrants encroaching on their businesses. The U.K.’s Davis argues that it makes little sense to have a deal that covers only goods when 71% of EU GDP, and 80% of the U.K.’s, is generated by services.

“They either want to have a broad economic relationship with the UK, or they don’t,” The Guardian quoted an unnamed U.K. government source as saying.

Elsewhere in the interview, Barnier also said that the U.K. couldn’t unilaterally abort the Brexit process. While that’s in line with what the EU treaty says, it is at odds with most EU politicians’ comments, which have left the door open for Britain to change its mind up until the last moment. However, Prime Minister Theresa May insists that her government will see the process through, and last week dismissed suggestions of a second referendum—supported by growing number of lawmakers in parliament (albeit still a minority)—as a ‘betrayal’ of last year’s vote.

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