Philip Hammond to EU: Ditch the Brexit punishment and start talking trade

Catherine Neilan
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Philip Hammond will tonight slam the "relative silence" of the EU over our future trading partnership and stress the bloc must ditch any thoughts of "punishing" the UK for Brexit.

Speaking at the Die Welt economic summit dinner in Berlin this evening, the chancellor will tell the EU that "it takes two to tango" and urge leaders to start preparing for a future relationship that includes "high levels of access for goods and services".

"I know the repeated complaint from Brussels has been that the UK 'hasn’t made up its mind what type of relationship it wants' but in London, many feel that we have little, if any, signal of what future relationship the EU27 would like to have with a post-Brexit Britain," he will say.

Hammond will note the "marked asymmetry" between the "enthusiasm" of some third countries to strike a future trade deal and the silence from Europe.

“I am saying this to you tonight, because I fear that many EU opinion-formers see this as a question only for British politicians, for British voters to resolve, before they engage with the EU27," Hammond will tell the private dinner.

He will also urge the EU to consider "putting behind us any narrative of “punishment” for leaving and focusing on the mutually beneficial relationships we have now and can continue in the future".

By doing so the EU "will send a message to the British people which will resonate as they consider the options for their future," Hammond will add.

He is speaking a day before he, Theresa May and Brexit minister Robin Walker meet banking chiefs in the latest of Downing Street's regular roundtables, aimed at better engaging business following accusations that industry was frozen out in the run up to last summer's General Election.

Around a dozen senior figures from firms including Goldman Sachs, Barclays and HSBC are expected to attend and the pressing need for clarity around transition and trade will be high on the agenda. It is the first meeting with City chiefs since the UK was granted sufficient progress by the European Council, meaning post-Brexit transition and trade can now be discussed.

Downing Street confirmed there would be "various CEOs" and "European chiefs of financial institutions who have a presence in the UK".

Read more: Barnier: The UK must end Brexit transition period by 31 December 2020

Prominent bank leaders expected to attend the meeting, first reported by Sky News, include Goldman Sachs's top London banker, Richard Gnodde, and HSBC chairman Mark Tucker. A senior banker from JP Morgan and Barclays chief executive Jes Staley have also been invited, City A.M. understands.

Agreeing a transitional deal with the EU to allow financial services firms on both sides of the Channel to continue to serve clients after Brexit in March 2019 is seen by bank bosses as a vital step in protecting the City.

However during a BBC interview with the chief executive of the Berlin stock exchange, Artur Fischer said it was looking increasingly likely that financial services would suffer a hard Brexit, without a bespoke deal for the sector.

"My feeling is that now for about one year we more and more come to the conclusion that it will be a hard Brexit when it comes to financial services," he said.

The Bank of England has previously warned that delays to a transitional deal this year will see "diminishing marginal returns", according to deputy governor Sam Woods, who warned banks will need at least a year to apply for licences as part of contingency plans.

Both Downing Street and Brussels have indicated their desire to complete a transition agreement by the end of March.

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