There is still a disconnect with reality in Downing Street. Within a day or so of Barnier specifically ruling out a trade deal that includes financial services, a spokesman for the PM tells reporters the government is confident of getting a deep and special partnership that will include a good deal for financial services (HERE).
Barnier has produced a graphic below (larger image HERE) showing how Britain has chosen to put itself below Turkey and Ukraine in terms of internal market access. He has also explained there is no trade deal anywhere in the world that includes financial services.
If we get a special kind of deal Switzerland would also want the same, they are above us in proximity to the market but even their banks have to have a big presence in London because of EU rules. There is no way the UK is going to get what it wants.
The EU will use this opportunity to try and lever some of the banks' operations away from London and really, who can blame them? This is a golden opportunity for them and they're going to put maximum effort into stealing as much as they can.
The lobby group CityUK must realise that lobbying the British government is a waste of time. They haven't got what the banks want and are not in a position to get it.
The IEA, a right wing, pro Brexit think tank are arguing that Barnier, in making a clear unequivocal statement that Britain will not get a special deal for financial services, is wrong. Julian Jessop, chief economist at the IEA (HERE) thinks Mr Barnier will do the opposite of what he told a group of reporters from newspapers including The Guardian, a few days ago.
It will be interesting to see how things pan out and if the optimistic Mr Jessop is right of if he is another Brexiteer about to be brought up sharply by a large dose of reality and realpolitik.
The EU do not intend to see the UK become better off after Brexit. They are not punishing us but applying the rules we helped to develop when we were a member, to the third country we have chosen to become after Brexit. There can be no favours, no help, otherwise the entire future of the European project will start to crumble.
Mr Jessop thinks that the EU, in order to avoid a slight and temporary drop in GDP, will risk the entire single market and sixty years of effort, to accommodate a country turning its back on Europe. They won't.
