British prime minister Theresa May has dismissed the European Union's proposal that a post-Brexit transition period should end by December 31st, 2020, describing it as an opening position in the negotiations.
Outlining the EU's negotiating guidelines for the transition in Brussels on Wednesday, chief negotiator Michel Barnier said it would make sense for the transition to end that day because it was the end of the current EU budget period. "The transition period is useful and it will enable the public administration in Britain to get prepared for the challenges they have to face," he said.
The guidelines make clear that Britain will be bound by all the rules of the single market and the customs union, as well as the jurisdiction of the European Court of Justice, during the transition. From the moment it leaves the EU in March 2019, Britain will lose all voting rights in the European institutions.
Mr Barnier suggested, however, that British representatives could be allowed to sit on some committees if it was deemed useful for co-ordination during the transition.
Ms May told the House of Commons liaison committee that the date suggested by Mr Barnier for the end of the transition was a statement at the start of negotiations and would have to be discussed. “We are about to start the negotiations,” she said.
After the EU and Britain agree the terms of the transition, they will start discussing the framework for a future trade relationship. Mr Barnier repeated on Wednesday, however, that he did not expect a free trade agreement (FTA) to offer much market access for financial services.
“There is no FTA between the EU and third country partnership that would allow privileged access for financial services,” he said.
Financial services
The Bank of England announced on Wednesday that it would allow European banks to continue to operate in Britain after Brexit under a “temporary permissions regime”. The prime minister on Wednesday told MPs that she expected the EU to soften its position on financial services.
"Mr Barnier has made a number of comments recently about the opening negotiating position from the European Union. The Bank of England and the Treasury have been setting out today reassurance to ensure that banks will be able to continue to operate and will be able to continue to ensure that the City of London retains its global position. But this will be of course part of the negotiations on phase two of Brexit," she said.
The prime minister told the liaison committee that the commitments she made on the Border in last week’s agreement with the EU would hold even if Britain left without a deal.
“If we get to that point we will ensure that it is possible for trade to continue . . . without having a hard border and without having that physical infrastructure at the Border,” she said.
Ms May avoided a defeat on the EU Withdrawal Bill on Wednesday night by accepting an amendment which would allow the government or parliament to change the date of Brexit. She told MPs she would only extend the date in exceptional circumstances and for a very short time.
