Here's your hat, what's your hurry? That was Michel Barnier's message to Britain on Wednesday as he laid out the EU's negotiating guidelines for a transition period after Brexit. Theresa May has called for a transition lasting "around two years", during which trading conditions between Britain and the EU would remain the same as they are now.
Soft Brexiteers quietly hoped that the transition could be extended for a year or two, or even indefinitely, while the two sides negotiated a free trade deal. Both the British government and the EU said all along that the transition must be strictly time-limited, and Barnier demonstrated on Wednesday that the EU meant it.
The transition should be over, he said, by the end of December 2020, when the EU's current budget period ends. So it would last just 21 months. May told MPs on Wednesday that she believed that Britain and the EU could negotiate a free trade deal before the end of March 2019. But as Labour's Hilary Benn told her, nobody else believes it is possible.
Barnier this week produced a useful little chart in the form of descending steps showing each of the options Britain’s red lines had shut down. Because it is leaving the single market and the customs union, does not wish to make big payments to the EU and rejects the jurisdiction of the European Court of Justice (ECJ), a deal like Canada’s is the only option left.
Brexit secretary David Davis has floated the idea of Canada-plus-plus-plus, so that Britain could enjoy the freedom of a simple free trade agreement but with privileged market access to the EU for its financial services. Barnier repeated on Wednesday that Brussels is only offering Canada Dry, and that he cannot envisage a free trade deal that would include financial services.
"We value the important role that the City of London plays, not just as a financial centre for Europe but actually a financial centre for the world. We want to retain that and maintain that," May told MPs on Wednesday.
Her problem is that the rest of Europe is less convinced of the strategic importance of the City for the entire continent. Or to put it another way, they don’t believe that the strategic activity that is now based in London must remain there after Brexit. And the longer a question mark hangs over the fate of financial services in the final deal, the more time there is for City jobs to move to Frankfurt, Paris and Dublin.