Sign up here to receive the daily news briefing in your inbox every morning with exclusive insight from the BrexitCentral team Theresa May rebukes EU’s Barnier over ‘bespoke’ Brexit trade deal… Downing Street has hit back at the European Union as the new battle lines for a Brexit trade deal were drawn. Theresa May’s spokesman expressed confidence that UK financial services would “get a good overall deal” despite Brussels’ chief negotiator Michel Barnier ruling out a special offer for the City of London. The spokesman said Britain would demand a “significantly more ambitious” agreement with Brussels than its one with Canada. And he branded a Norway-style arrangement “democratically unsustainable, because it would mean automatically adopting all EU rules without influence or a vote”. The spokesman also appeared to suggest Brussels would back down over its own red lines. He said: “This is the beginning of the phase two negotiations. You would expect the Commission to be setting out their position. I would imagine you will hear a lot more from them before you hear less.” – Sky News Theresa May says we can have a special deal for Britain’s banks after Michel Barnier declares war on the City – The Sun May insists on ‘bespoke’ trade deal in face of EU’s rebuttal – Bloomberg David Davis to warn EU it cannot cherrypick in Brexit trade deal talks – Guardian Barnier’s sliding scale: EU told Brexit red lines leave UK with stark choice of Canada-style agreement – or no deal – Telegraph (£) …as City bosses label Barnier ‘Scrooge’ for ruling out bespoke Brexit deal… City bosses have hit back at the EU’s lead Brexit negotiator, Michel Barnier, for suggesting a trade deal between the bloc and Britain cannot include special arrangements for financial services. Square Mile lobby group TheCityUK branded Mr Barnier a “Scrooge” for ruling out a bespoke agreement for cross-border frictionless trade between banks and other financial firms… TheCityUK’s Mr Celic urged Brussels to be more open-minded. He added: “Services make up around 80pc of the UK’s economy – and around 70pc of the EU’s, with financial services making up a significant component of that. “It is vital for the future competitiveness of the UK, and Europe as a whole, that UK and EU negotiators work to secure an ambitious and comprehensive deal.” – Telegraph City figures reacting to an interview the EU chief negotiator gave to a consortium of European newspapers say that his hardline rhetoric may help their cause by forcing the government to come out fighting early for their cause… They want an official U.K. position on financial services now, with the government ready to spend political capital defending it… “We in the U.K. misunderstand how trade deals work. It’s not a normal negotiation. You don’t play things off in the normal way. You put your draft on the table and say ‘that’s what we’re talking about’ … It’s not a question of poker, it’s a question of who wins the power game,” said another government affairs head at a bank in London. “That said, the U.K. has to say in return — ‘No goods deal for you if no services deal for us,’” they added. – Politico Bah humbug: City lobbyist hits out at Michel Barnier’s hard talk on Brexit trade deal – City A.M. UK cannot have a special deal for the City, says EU’s Brexit negotiator – Guardian The City of London falls under Brussels’ wary eye – FT View (£) Bank of England to unveil Brexit plans: Deal or no deal, EU banks to be able to operate as normal – City A.M. …and Barnier’s comments spark backlash from EU leaders Michel Barnier has irritated EU leaders by going beyond his brief to mount a series of attacks on Theresa May’s Brexit trade deal hopes. Ministers have been told that senior Brussels figures – including EU Commission boss Jean Claude Juncker – are “not happy” with their chief negotiator for his unauthorised rants… A senior Government source said: “Nobody pays any attention to what Barnier says in Brussels, yet in Britain it is oddly taken as EU gospel when it is not. They are not happy with Barnier. Juncker has fallen out with him because of his colossal ego, and even Selmayr is having second thoughts.” Mr Barnier was also slapped down by his own Brussels comrades for ruling out the City’s access. One EU official told The Sun: “It is too early to draw conclusions on how the future relationship will look like. This will need to be discussed during the talks.” – The Sun Michel Barnier to be sacked? EU Brexit chief sidelined by ‘furious’ Jean-Claude Juncker – Express Michael Gove ‘warns colleagues to avoid re-run of project fear’… Michael Gove has warned senior colleagues to avoid a re-run of “project fear” during a crunch cabinet meeting over what Brexit end state the government should be aiming for, the Guardian understands… Details of the cabinet discussions emerged as Theresa May told her cabinet that she aims to pursue a bespoke trade deal that is “significantly more ambitious” than the EU’s deal with Canada, in the first formal discussion ministers have held about goals for final outcome… In what was described as a more “lively” meeting than Monday’s Brexit inner cabinet discussion, the chancellor was supported by Rudd and others in pressing for a final outcome in which the British economy remained close to that of the EU. Amid a spectrum of views set out at length over a long session, they wanted to see the most alignment, while others – such as Johnson and Gove – pushed for Britain to be more able to diverge on standards from the EU. – Guardian …after ministers reportedly back Boris and Gove’s Brexit vision in Monday ‘war cabinet’ meeting The Prime Minister’s so-called “Brexit war cabinet” met on Monday for a preemptive discussion on the topic. During that meeting, Philip Hammond, the Chancellor, and Amber Rudd, the Home Secretary, were left isolated as the only senior Cabinet ministers holding out against the UK diverging from Europe after Brexit. The pair were the sole members of the 10-strong Cabinet Brexit sub-committee to argue the case for maintaining EU alignment, saying the status quo would be better for existing businesses. Boris Johnson, the Foreign Secretary, and Michael Gove, the Environment Secretary, rallied other ministers around their vision of Britain gradually breaking from EU rules and regulations so it can quickly take advantage of future business opportunities, rather than being shackled to a slow-moving, protectionist EU… Mrs May is likely to use a major speech in the new year to set out what the UK’s post-Brexit “end state” will be, according to reports. – Telegraph EU prepares to compromise on fishing quotas during transitional period Britain will not have to sign up to EU-imposed fishing quotas as part of its transition deal with the bloc after a climbdown by Brussels. Despite publicly insisting that the UK would have to adopt the “complete architecture” of the EU during any implementation period, in private the bloc’s negotiators are preparing to compromise. The change comes after pressure from British negotiators who argued that it was not tenable for Brussels to impose the EU-wide fishing quotas because Britain no longer had a say on those quotas… The concession on fisheries is a victory for Michael Gove, the environment secretary, who led demands that Britain pull out of the policy straight after Brexit… A senior EU official told The Times: “We are thinking about a fair play kind of solution. The important thing is that people don’t need to feel discriminated on the UK side.” – The Times (£) London fears Madrid wants to drag Gibraltar into Brexit transition talks Is Spain about to pull a fast one? That was the concern in London Monday night as whispers reached the U.K. government that Madrid was trying to drag Gibraltar into discussions on a transition period after Brexit, according to a senior government official. The Spanish government scored a diplomatic victory at the outset of the Brexit talks by convincing the rest of the EU27 to give Madrid an effective veto on the future U.K.-EU trade relationship and how it affects Gibraltar. But until now the U.K. thought this only affected the future relationship which will be signed after Britain has left the EU… London now believes Spain is trying to negotiate a veto on how the transition affects Gibraltar, the official said. On Wednesday, the European Commission will issue its draft negotiating mandate setting out how the transition will be negotiated, with the aim of formal directives being issued at the European Council in March. – Politico Gibraltar becomes latest sticking point in Brexit talks – FT (£) Theresa May in Brexit bind as she faces calls to condemn anti-democratic Polish government – Telegraph (£) Ministers prepare to accept new widely supported ‘exit date’ amendment to EU Withdrawal Bill Sir Oliver Letwin, David Cameron’s former “fixer”, unveiled a compromise amendment to the EU (Withdrawal) Bill last week which would allow Mrs May to set the date on the face of the Bill but also allow Parliament to vote to change it if negotiations overrun. Sir Oliver’s amendment has now won the support of 40 of his fellow Tory MPs which means the Government will have to accept it when it is debated on Wednesday or likely lose another key vote because of a Conservative rebellion… Sir Oliver’s amendment was co-signed by leading Brexiteer Bernard Jenkin and Jeremy Lefroy, a prominent pro-Remain MP. It has now won the support of dozens of other Conservative MPs including Eurosceptics like Jacob Rees-Mogg, Sir William Cash and Nigel Evans as well as numerous pro-Europe Tories like George Freeman, Paul Masterton and Nick Boles. A number of last week’s Tory rebels have already expressed their support for the amendment. – Telegraph May to water down plan to enshrine Brexit day in law – FT (£) > Martin Howe QC on BrexitCentral: What the ‘meaningful vote’ and ‘exit date’ amendments are really about U.K. tops Forbes’ Best Countries for Business survey for the first time despite Brexit After the United Kingdom narrowly voted last year to leave the European Union, predictions swirled that the British economy would collapse. Yes, the pound plummeted 9% versus the dollar the day after the surprise result and remains down, but the economy as a whole has held up relatively well. Gross domestic product grew 1.8% in 2016, a tick behind only Germany’s 1.9% growth among the Group of Seven industrialized nations. Economic growth has continued in 2017, home prices are up and unemployment has sunk to a 42-year low at 4.3%… The U.K. ranks first for the first time in Forbes’ 12th annual survey of the Best Countries for Business… The U.K. scored particularly well on technological readiness (fourth) and the size and education of its workforce (third). Its’ $2.6 trillion economy is the fifth largest in the world. London serves as the central hub for European financial services and is home to financial giants like HSBC, Prudential and Barclays. – Forbes The UK has just been named the best country for business in 2018 – City A.M. CBI quarterly trend: Everything is awesome – Guido Fawkes By rebalancing Britain’s economy, Brexit is succeeding where George Osborne failed – Ross Clark for the Spectator Theresa May sends Christmas message to UK citizens living in Europe Theresa May has sent a Christmas message to UK citizens living in Europe reassuring them of their rights after Brexit. In her letter the Prime Minister acknowledges the anxiety the referendum result has meant for British families living abroad, and says she has won a deal with Brussels for a reciprocal guarantee of rights. She also outlines some of the key details of the agreement, including healthcare rights, pensions and benefits and whether family members will be able to join expats. – Independent ‘No significant Russian activity’ during EU referendum Another report this morning, this time in the FT, rubbishing the claims by fanatical Remainers of Russian intervention in the referendum. Researchers at Oxford University found that just 105 Russia-linked accounts tweeted in the run up to the vote. These numbers are negligible, by comparison there were 2,752 Russia-linked accounts operating during the US election. The report concludes that there was no “significant Russian activity” during the referendum… Ben Bradshaw, Tom Brake and co are oddly quiet about the FT story this morning, and indeed they have been silent about the stories above. Yet still ultra Remainers continue to peddle the patronising idea that Russian bots tricked 17 million people into voting Leave. – Guido Fawkes Russian tweets on Brexit were minimal, study shows – FT (£) No, Russia did not cause Brexit, Britain’s Eurosceptic tradition did – Professor Matthew Goodwin for Newsweek Remoaners fined £20k for hiding how much they spent on the EU referendum campaign – The Sun Liberal Democrats fined £18,000 and Open Britain fined £1,250 for breaching campaign finance rules relating to EU referendum – Telegraph Lib Dems call for second EU referendum in December 2018 Britain could have a second EU referendum as an early Christmas present in 2018, the Liberal Democrats have said, proposing a lengthy 12-week campaign starting in September to give the UK the option to accept a deal or stay in the EU… Critics have argued that a second referendum would be an incentive for European leaders to give the UK a poor exit deal. Theresa May said in the Commons on Monday that promising a referendum would “actually be betraying the British people”… Cable said his party would campaign to remain in the EU regardless of the outcome of the Brexit negotiations, as any deal agreed could not have better terms than full membership. – Guardian Julian Jessop: Michel Barnier’s Brexit Scrooge act should fool no-one Remainers have been quick to trumpet this as ending hopes of a special deal for the City. They are wrong. Nonetheless, Monsieur Barnier’s latest remarks may still say a lot about the EU’s approach to the talks. There are two ways to interpret his comments. First, and most likely, they are simply a starting point for the next phase of negotiations… In reality, the UK should be able to improve substantially on the Canada deal, not least because it is a much more important trading partner. For example, the rest of the EU exported goods worth €246 billion to the UK in the first ten months of this year, far exceeding the €32 billion that the EU28 (even including the UK’s share) sold to Canada. What’s more, businesses and households in the rest of the EU are enthusiastic customers of the services provided by the UK, including financial services, for good reasons. Both sides are benefiting from the City’s strengths. – Julian Jessop for the Telegraph (£) Lee Rotherham: Yes, Canada Plus is a real possibility – and the EU’s own history of trade deals proves it The Commission is indeed the front man on the EU side but, happily, its role is not absolute, and its power is destined to shrink, the closer we move towards the deadline… In short, we should ignore the Commission’s rhetoric, and focus instead on the four real variables that are linked to the trade talks: the need for equivalence; the pace of divergence; the opportunities of variable geometry; and the prospect of multi-speed divergence. Case history and the range of treaty models all show considerable precedent for the UK reaching a bespoke trade deal, based on a free trade model, and tailored to sectors of mutual advantage. – Dr Lee Rotherham for ConservativeHome The Sun: The rich elite of the Remain resistance are trying to nullify the little people’s votes The rich elite of the Remain resistance have hired leftie Lord Malloch-Brown to run their deranged campaign to nullify the little people’s votes and brainwash them into having another go. He reckons Parliament’s “meaningful vote” next year, forced on Theresa May by Tory rebels, is the moment “to stop the train wreck”. That’s regardless of how good a deal she strikes in Brussels. He and his sneering, entitled, millionaire mates — Blair, Clegg, Mandelson and the rest — actually believe a couple of dubious opinion polls showing a slight Remain uptick should over-ride a referendum in which 33.6million voted. More dangerously, they think they can overturn the majority’s 17.4million votes with no consequences. Do they not worry what hideous forces they could unleash? …The PM commendably stood firm yesterday. She must never waver. No to single market and customs union membership. No to a second referendum. No to remaining shackled to EU rules while trade deals around the world are there to be struck. – The Sun says Remainers hire millionaire former lobbyist, Economist journalist and friend of Bono – Guido Fawkes Tony Blair deserves the credit for Brexit – Iain Martin for Reaction Brian Monteith: There can be no Brexit without absolute divergence from the EU What is the point in seeking to “take back control”, only to then sub-contract the drafting and oversight of regulations that govern our economic prosperity to a third party? Even worse would be if we had no say or policing of any new laws were they to apply domestically in the UK. Nobody was asked to vote for that, and it would be absurd to end up with such an arrangement. The new battleground in the long march towards leaving the EU is whether or not the UK should sign up to alignment with EU institutions and their rules and regulations – or if we should be able to diverge and go our own way. It is a debate that should not be necessary, but so confused have some of our political leaders and much of the chattering classes become about how trade works that we are being suckered into thinking we either need a free trade deal with the EU, or at the very least must have “alignment” so we can still trade with it. Trade does not require free trade agreements to happen. They might help, but they are not a prerequisite – and nor is “alignment”. – Brian Monteith for City A.M. Daily Express: Bullying, dictatorial and hysterical: Michel Barnier’s attitude shows worst side of the EU Even before the referendum on Brexit other EU cities, especially Paris and Frankfurt, were blatantly manoeuvring to take over from the City of London as Europe’s most important financial centre. Now that we have voted to leave the gloves are off… In trying to inflict some kind of penalty on us for wishing for our independence, the EU is showing itself at its absolute worst. Bullying, dictatorial, hysterical and totally impervious to the wishes of anyone other than a group of unelected bureaucrats, this is the reality of the EU as it stands today. What they are really terrified of is the prospect of other countries following Britain’s example. Their actions make that ever more likely every day. – Daily Express editorial Brexit comment in brief Theresa May educates her Cabinet on the joys of cherry-picking – Katy Balls for the Spectator Brexit is an opportunity to tackle inequality – Mark Scott and Charlie Cooper for Politico Brexit predictions for 2018 – Tony Barber for the FT (£) Look behind you, Brussels. The old Habsburg nations want change and they’re not going anywhere – Tibor Fischer for the Telegraph (£) The limits of Macron’s liberalism – Diego Zuluaga for CapX How Italy turned Euroskeptic – Naomi O’Leary for Politico Brexit news in brief Britain is the most individualistic country in the EU, Europe-wide survey finds – Independent Revealed: The most eurosceptic country in the EU (and it isn’t Britain!) – Express EU will refuse to back UK over Falkland Islands in future UN votes, suggests former ambassador – Independent