The Prime Minister is still seeking a "unique deal" after Brexit, despite growing signs that Brussels is planning to offer a basic framework mirroring its Canada trade deal.
Scoping documents seen by Politico suggest Michel Barnier and his team are planning to put forward a Canada-style framework for future trading, rejecting Theresa May's requests for a bespoke agreement.
The EU's position is that if the UK leaves the Single Market and customs union, only a “standard” free trade agreement will be possible, with “no direct branching in areas like financial services” and only “limited EU commitments to allow cross border provision of services.”
City A.M. reported Barnier was leaning towards the CETA approach back in October. It lifts 98 per cent of tariffs for trade in goods, but offers no lifeline for the City.
At the time, former business secretary and Liberal Democrat leader Vince Cable warned "the exodus of firms would accelerate" under a deal of this kind.
Nomura analyst Jordan Rochester said: "Who expected anything more at this stage? That process will take a very long time to sort out, especially when Barnier says it could take three years. What matters for GBP in the short run is how soon Theresa May offers the eventual concession of more money."
This morning the Prime Minister's spokesman declined to recognise reports that she was considering a compromise on the divorce bill, stressing the government's position had not changed since May's Florence speech two months ago.
During yesterday's meeting with Manfred Weber, a key ally of Angela Merkel and leader of Germany's European People's Party (EPP), May set out "her desire to achieve a unique deal", as well as reiterating her hopes for a transition period to give businesses "and others" some much-needed clarity.
Weber last night admitted the meeting had helped to improve his view of the situation, having previously said he thought a deal this year was unlikely.
Last night he said: "After my meetings here in London my main message is I am more optimistic, there is progress... That is the most important thing because the perspective from a European point of view towards London was in the last weeks not so clear."
Regarding the divorce bill, Weber added: "The most important thing is not the figure. The most important thing is to clarify the commitments - the areas where Great Britain has to see its commitments."
A Downing Street spokesperson said Weber and May had discussed the need for a transition period, partly to ensure “the stability of the financial sector across Europe.”
Last week, Barnier gave the UK a fortnight to put a figure on the table. Without this, he said, trade would not be discussed this year. Reports are now suggesting May could table a significant offer before the next EU Council summit on December 14.
Meanwhile Guy Verhofstadt struck a positive tone in an interview published today.
“It’s our goal to conclude the talks with an agreement. And I‘m actually not so pessimistic about that,” Verhofstadt told Handelsblatt newspaper.