Brussels warns of far reaching Brexit impact as talks make little headway

Brussels has warned UK nationals to prepare for “thorough checks” at EU borders and the loss of rights such as free movement for pets and automatic recognition of driving licences, in a stark warning of Brexit’s ramifications. 

On the same day that Michel Barnier, the EU’s Brexit negotiator, said that “significant divergences” remained in Brussels’ future-relationship talks with Britain, the European Commission on Thursday issued a policy paper warning of “far reaching and automatic changes” regardless of the outcome of the negotiations. 

The paper, published to help companies and citizens prepare for the end of Britain’s transition period on December 31, reflects Mr Barnier’s repeated warnings that the UK cannot “cherry pick” the benefits of the single market in a future trade deal. 

Brussels also underlined that it would not mirror the UK’s intended policy of showing leniency when it comes to customs formalities in the months after the transition ends, telling businesses to prepare for a full suite of checks and “inevitable disruptions”.

“There is no room for complacency or postponing readiness and adaptation measures in anticipation that an agreement would ensure continuity,” the paper says. “If not yet done, public administrations, businesses and citizens in the Union must urgently take all the necessary readiness measures.”

The paper reflects anxiety in Brussels that businesses on both sides of the Channel have yet to process the full ramifications of Brexit more than four years after the referendum, with too much focus being placed on the potential benefits of a future trade deal. 

Mr Barnier in recent weeks has underlined examples of inevitable changes, such as the City of London’s loss of comprehensive market access rights and its need to rely on a much more patchy system known as “equivalence”.

The EU paper says that Brussels will act to temporarily allow European companies to access critical financial market infrastructure in London after the end of the transition period.

But it also warns that certain other equivalence rights will not be in place at the end of the year because the EU’s own regulations are in flux. For such areas, which include some access rights for UK investment firms, “the commission will not adopt an equivalence decision in the short or medium term”.

Other specific warnings to businesses include that UK imports could be subject to anti-dumping duties and other punitive measures in the event of a possible EU-UK trade dispute. 

Brussels nonetheless stressed that it was in both sides’ interest to broker a deal on their future relationship, saying that failure to do so “would lead to disruptions that would be more far reaching than the changes outlined”.

Negotiators on Thursday wrapped up three days of talks in London warning that a deal was not yet in sight.

Mr Barnier said on Twitter that the two sides would continue their talks in Brussels next week, with EU and UK officials saying that attention was now increasingly focused on the next negotiation round in the week of July 20.

“We will continue working with patience, respect and determination,” Mr Barnier said.

British and EU officials involved in this week’s London talks agreed in advance not to provide a detailed commentary on negotiations, a signal of restraint seen in the UK that talks are getting serious.

Downing Street said a dinner on Tuesday had provided a “constructive opportunity for David [Frost] and Michel Barnier to meet in a more informal way ahead of the specialised sessions”.

A UK spokesperson said the two had discussed key stumbling blocks in the talks including trade in goods and services, fisheries, governance, the creation of a regulatory level-playing field and law enforcement.

Separately, on Thursday, the commission published Mr Barnier’s reply to a recent letter from the MP Mark Francois, in which he wrote that results in the talks “have been disappointing”.

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