EU diplomats and officials have warned negotiations on a future trading relationship will now likely end in an economically damaging split. During a weekend interview, Chancellor Sajid Javid warned businesses there will be a decisive break, saying “we will not be a rule-taker”. Mr Javid’s comments come as a wake-up call to Brussels, who will finally begin work on a looser future relationship with the UK.
One EU official said: “The main conclusion for the real economy is: prepare for the worst. Anything agreed will be a bonus.”
A diplomat added: “In the end it is all rather simple: If Britain wants to diverge from EU rules, it will diverge.
“Such an approach would obviously lead to new trade hurdles between Britain and the EU and in consequence less trade, less investments, less jobs.”
During a series of planning meetings over recent, EU diplomats have stressed the UK’s future market access to the single market will depend on alignment with the bloc’s rulebook.
EU Commission chief Ursula von der Leyen insisted an EU offer of tariff-free, quota-free trade would require the UK to sign up to a so-called “level playing field”.
The bloc’s negotiators are drawing up the plans to prevent UK firms from undercutting their EU counterparts as part of any trade deal.
Brussels wants the new measure to cover taxation, labour and environmental standards, as well as state aid provisions.
According to a series of negotiation documents, the bloc hopes to use “non-regression” clauses that would block the UK lowering its standards to deliberately improve its competitiveness.
Meanwhile minister have discreetly restarted no-deal planning in case Brussels continues to stick to its hardline stance in negotiations over the post-brexit deal.
The Cabinet’s EU exit committee, chaired by Michael Gove, met last week to discuss preparations for the talks breaking down ahead of the end of the transition period at the end of the year.
EU chiefs have repeatedly attacked Boris Johnson’s pledge to leave Brussels’ rules and regulations at the end of the transition.
Key figures from the bloc have claimed the deadline is too tight, but ministers fear they could be attempting to pile pressure on the Prime Minister.
One minister at the meeting on Thursday said the gathering was held to consider what happens should Brussels “fail to grasp we really are going at the end of the year”.
Official trade talks are set to begin next month after the UK formally leaves the EU on January 31.