Sign up here to receive the daily news briefing in your inbox every morning with exclusive insight from the BrexitCentral team UK must not be allowed a post-Brexit competitive advantage in financial services, claims European Parliament’s Guy Verhofstadt… A bespoke Brexit deal on financial services “cannot be the outcome of negotiations” according to the man in charge of the EU parliament’s position on the matter. Guy Verhofstadt, the EU parliament’s Brexit chief, has suggested that Britain cannot cherry pick the areas where it wants to make bespoke deals, and that any deal should ensure there “should be no competitive advantage for either the UK or EU”… “We want a level playing field,” he added. – City A.M. …as he warns that a final UK-EU trade deal will not be agreed before Brexit day… The UK’s Brexit trade deal with the EU will not be finalised before exit day, Guy Verhofstadt has warned. Instead there will be an “annex” inside the withdrawal agreement which will set out what a future relationship might look like, to be thrashed out during the transitional period while current rules remain in place. The Prime Minister has previously ruled out such a situation, stating instead that a new trade deal must be agreed while negotiations to leave the union take place so the UK can be ready to forge new trade deals around the world in 2019. – Telegraph …and suggests that MEPs could yet vote down any deal and trigger a British political crisis A final Brexit deal could still be voted down by the European Parliament, triggering a crisis in British politics, its chief negotiator warned yesterday. Guy Verhofstadt said if MEPs – or even British MPs – voted against whatever agreement is reached, the UK would fall into ‘unknown territory’. He said such a situation might lead to a change in government and a ‘new position of that government on Brexit’. In a provocative interview yesterday, the Belgian MEP also insisted Britain would have to accept that EU migrants who came here during the transition period would have the right to stay. – Daily Mail Theresa May must accept off-the-shelf deal from EU or Britain will fall off cliff-edge, top Eurocrat warns – The Sun May’s Brexit transition demand ‘would penalise EU citizens’ – Guardian > On BrexitCentral’s YouTube: Guy Verhofstadt says there cannot be competitive advantage for Britain post-Brexit Emily Thornberry hints at Labour backing for remaining in an EU customs union… Shadow foreign secretary Emily Thornberry has hinted Labour could back remaining in a European customs union after Brexit. Her comments came as former shadow home secretary Yvette Cooper called on the party to support staying in the customs union after any Brexit transition period. Ms Thornberry said that “we’ve looked at it and we cannot see a way forward when it comes to Northern Ireland or to tariff free trade across Europe without us being in some form of customs union, that probably looks very much like the customs union that there is at the moment”. – Belfast Telegraph Emily Thornberry describes Labour’s Brexit policy as an “ongoing conversation” – City A.M. Labour’s sister party in Northern Ireland urges Corbyn to back single market and customs union membership – PoliticsHome > On BrexitCentral’s YouTube: Emily Thornberry says Labour want a Customs Union similar to that we’re in now …while Jeremy Corbyn defies Labour clamour for Britain to stay in customs union after Brexit Jeremy Corbyn will disappoint Labour MPs expecting a clearer commitment to remain in a customs union with the EU after a meeting of senior shadow ministers today. Backbenchers had believed that Mr Corbyn would agree that Britain should stay in a customs union at a meeting of the shadow cabinet in a move that would have sharpened the divide between the two main parties on trade talks with Brussels. Emily Thornberry, the shadow foreign secretary, all but confirmed such a move when she told Peston on Sunday on ITV that Labour believed a form of customs union was the only way to avoid a hard border with Ireland… Labour sources played down the significance of the meeting of the shadow cabinet’s Brexit sub-committee, however. They said Mr Corbyn would not make a statement afterwards. – Times (£) Ruth Davidson calls on sceptic Remainers to trust Prime Minister Theresa May ahead of the second phase of the Brexit negotiations Speaking on ITV Peston on Sunday, the Scottish Tory leader called on sceptic Remainers to trust Prime Minister Theresa May ahead of the second phase of the Brexit negotiations. Ms Davidson, who voted Remain in the June 2016 Referendum, admitted it was fair to recognise the UK Brexit negotiation team had made significant progress at the end of the first phase of the negotiations. She said: “Before the first phase people said we weren’t going to get a deal on EU nationals and we have. – Express Ruth Davidson warns Theresa May she would fight ‘no deal’ Brexit – Telegraph (£) Theresa May’s vision starts to emerge for post-Brexit reality As Theresa May retreats to the countryside with her Cabinet to thrash out differences on Brexit, it’s starting to become clearer what the prime minister wants the divorce to look like. Some in Brussels will call it cherry-picking, but May wants to stay very close to the European Union in some areas, while breaking free in others. With trade talks round the corner, a picture is emerging after Foreign Secretary Boris Johnson kicked off a series of big speeches last week. Next up is the U.K.’s chief negotiator. Last time David Davis spoke, he said very little would change after Brexit and that the important thing was just to win the freedom to ditch EU rules if a future government chose to. – Bloomberg Most British businesses can’t wait to ditch Brussels because they believe Brexit will boost the economy Most British firms support Brexit and believe it will boost the economy, a survey reveals. Despite the doom-laden warnings of business groups such as the CBI, the poll shows that 53 per cent of UK companies believe leaving the European Union will be good for the nation’s prosperity. The same proportion think it is in their firm’s best interests, the survey by FTI Consulting found. When asked about their personal preference, nearly two-thirds of bosses said they would rather be out of the EU. It is in sharp contrast to the views of campaigners at big business organisations, who loudly proclaim their opposition to major changes as we leave the bloc. The pro-Brussels Confederation of British Industry has warned of economic catastrophe unless we remain in the customs union. – Daily Mail EU plan to bolster defence co-operation sparks US concern Reservations about the EU’s plans have been most clearly articulated by Jens Stoltenberg, Nato secretary-general. The EU’s efforts on defence risked “weakening the transatlantic bond … duplicating what Nato is already doing and … discriminating against non-EU members of the Nato alliance”. The EU should be clear, he added, that it couldn’t protect Europe by itself. After Brexit, “80 per cent of Nato’s defence spending will come from non-EU allies,” he said. Such rhetoric earned a strong warning from Sigmar Gabriel, the acting German foreign minister, that the US should not stand in Europe’s way. “No one should try to divide the EU — not Russia, not China, but also not the US,” he told the conference. – FT (£) Tech industry warns ministers not to drop EU data security laws The British tech industry has issued a stark warning to leading Brexiteer ministers that diverging from EU data protection standards after Brexit will “undermine” the UK’s status as Europe’s leading tech hub. In an open letter to Liam Fox, the International Trade Secretary, Julian David, the chief executive of the industry’s leading lobby group, said that remaining closely aligned with the EU would not stop the UK seeking trade deals after Brexit. “Diverging from EU data protection rules in domestic law post-Brexit would undermine this opportunity,” wrote Mr David, of TechUK, which represents nearly 1,000 UK tech firms, including several FTSE 100 companies. – Telegraph Liam Fox and Boris Johnson don’t understand EU rules, says tech boss – Times (£) British farmers need a Brexit fund, MPs say British farmers will need a special “Brexit fund” to help the agricultural sector adapt to new trading rules after leaving the European Union, MPs have warned. Analysis of the potential impact of Britain leaving the bloc found that farmers face export tariffs if no trade deal is reached with the EU – and that could be passed on to consumers in the form of higher prices. “60 per cent of the UK’s agricultural exports and 70 per cent of its imports are from the EU,” said Neil Parish, chair of the environment, food and rural affairs committee which produced the report. – City A.M. Food standards ‘must not be sacrificed to cheap imports’ after Brexit, say MPs – Independent Brexit farming fund ‘income support for super rich’ – BBC News > Neil Parish MP on BrexitCentral yesterday: We need to create ‘Brand Britain’ to make agriculture flourish after Brexit UK hits visa cap on skilled workers for third month in row Britain has hit its cap on visas for skilled non-European workers for an unprecedented third month in a row, deepening the staffing crisis facing the NHS and other key employers. When the monthly quota was reached in December and January for the first time in seven years immigration lawyers had expected it would prove to be a blip, but they now fear it is turning into a long-term problem. More than a third of the tier-2 work visas issued by the Home Office go to medical and other staff recruited to work in the NHS. Migration experts expect that among the first group to be turned away will be doctors and other healthcare staff, software developers and scientists. – Guardian Jonathan Hill: Britain should make its own rules on services and the City after Brexit The nature of our future relationship with the EU will not be static, but dynamic. And it is already moving: moving in directions we have traditionally resisted, whether that is a financial transaction tax, or more screening of overseas investment, or more centralisation of supervision of financial services. For an economy that is as dependent as ours on services, how could we in all seriousness subcontract our rule-making to someone else? Some people say that Norway manages, but our economy is not remotely like theirs. There is another reason why we must surely place a greater priority on being able to shape our own future than on preserving things as they are: technological innovation is itself going to change the status quo, whatever we decide on Brexit. It would make little sense to tie ourselves to a framework that works well for current players if it means we forego the opportunity to shape a regime that works well for fintech. – Lord Hill of Oareford for Reaction Christian May: It’s time for the City’s Leave voters to stand up Most people working in the City and the broader field of financial and professionals services supported Remain in the June 2016 referendum. There isn’t much City-specific polling to back this up, but since possessing a degree, living in London and working in a profession are all demographic attributes associated with an increased likelihood to have voted Remain, it’s a fair assumption. If you consider your sector, company, office or even your train carriage on the morning commute, you’d probably feel confident that Remain was the dominant inclination. Dominant, but not exclusive. The existence of a firm, albeit modest, strand of support for Brexit among the City’s professional class was one of the reasons why this newspaper didn’t fall into line and endorse the Remain campaign. – Christian May for City A.M. Nick Tyrone: Clean Brexit might be only way to heal the cultural divide It may sound very strange for a Remainer to say that I think hard Brexit has become necessary. But that’s where I think we might now be. Despite a terrible, shambolic set of negotiations so far by Theresa May and her cohorts; despite forecasts of economic doom, particularly for the North East and the Midlands, for all possible Brexit scenarios; in spite of everything, public opinion has not really moved on Brexit. We’re about 50-50 on the subject as a nation, still. If there was another referendum on EU membership for some reason, it could go any which way, and I certainly wouldn’t bank on a vote for Remain, not by a long shot. Like many Remainers in the wake of the June 2016 vote, I drifted towards the idea that a soft Brexit was the best option from where we found ourselves post-referendum. That staying in the single market if we could, but at the very least the customs union was the best plan. I’m far less sure of that now. – Nick Tyrone for The New European Roger Bootle: Our Brexit must be bold and avoid giving in to a limp transition Later this week, there will be a critical Brexit meeting at Chequers. There needs to be. Even though we are not much more than a year away from the Brexit date, key aspects of the UK’s situation remain unclear. One of the most vexed issues concerns the so-called “transition period”, which is due to come into force after March 2019 and to last “about two years”. “Transition” sounds like such a reasonable thing. It connotes gradualism, moderation and the capacity to make adjustments in good time. Indeed, that is exactly what it could be. But, in reality, the transition period has appeared at the centre of negotiations about Brexit for mainly political, and otherwise unnecessary, reasons. – Roger Bootle for the Telegraph (£) Victoria Hewson: Boosting customs systems needn’t be rocket science In last autumn’s Budget the Chancellor committed £3bn to Brexit preparations. The Taxation (Cross-border Trade) Bill is progressing through Parliament. So what should departments be spending this additional cash on, and what should we be looking for from the legislation? At the Legatum Institute Special Trade Commission we have worked with leading customs specialists at the Automated Customs and International Trade Association (ACITA) and we have some suggestions for the Chancellor and HMRC, the government authority responsible. HMRC will be at the forefront of Brexit preparations, implementing processes and infrastructure to allow trade to keep flowing between the EU and the UK. – Victoria Hewson for the Telegraph (£) Dominic Lawson: I greatly admire the academics who’ve come out for Brexit but they’ll need thick skins and courage Perhaps the most tediously familiar insult hurled at those who voted for Britain to leave the European Union is that they — we — are stupid. This is now being used as a sort of licence for the growing campaign to ignore the result of the 2016 referendum: if those 17.4 million people who voted Leave can be collectively defined as uneducated knuckle-scrapers, it amounts to a justification for disregarding the ballot-box. This argument — which seeks to redefine democracy in an astonishingly self-serving way — has finally provoked beyond endurance not the ill-educated, but some of the most sophisticated minds in the country. A group of 38 leading academics and ex-academics across a range of disciplines has launched a website called Briefings for Brexit. – Daily Mail Brains for Brexit! Meet the historians, philosophers, QCs and ex-MI6 boss who make up the 41 top-thinkers fighting the tide of Remain ‘propaganda’ – Daily Mail > Robert Tombs and Graham Gudgin on BrexitCentral yesterday: Our fellow academics must stop pushing dishonest anti-Brexit propaganda Charles Bowman: The future is bright for Australian-UK business relations I write today’s column from the sunny shores of Australia, and after just a few days here I can confidently say that the next few years will be a hugely exciting time for UK-Australian business relations. Following our vote to exit the EU, Australia was the first market with which the UK established a bilateral trade working group to investigate how a future enhanced trading relationship will look between our two countries. With all that I have seen over the last week, I now know why. This is a young, innovative, and dynamic place, with huge opportunities for growth and collaboration between our two countries. – Charles Bowman for City A.M. Brexit in brief We must not return to a hard border in Ireland – Jenny Chapman MP for the Times (£) Breaking the stalemate in Northern Ireland – FT (£) Japan and Scotland have a long history and a glorious future – David Mundell MP for the Times (£) What Prince Charles should say to the Commonwealth – Charles Moore for the Spectator ‘Partial’ customs union means paying a high price to be stuck in EU limbo – Mark Wallace for ConservativeHome Only 2% of Irish firms have plan for Brexit – Times (£) A crucial year for City’s IPO market as EU exit looms – Telegraph The right kind of Grexit – Politico Cardiff needs to keep strong links with the EU after Brexit for the sake of its economy, the leader of the city’s council has said – BBC News