UK officials are making the claim to their EU counterparts in a bid to sell the under-fire plan to Brussels – but news of the admission has enraged Tory Brexiteers who already view Chequers as a sell-out.
Anti-Brexit campaigners also seized on the news – saying it raised questions about “what on Earth” the point of leaving the EU actually was.
It comes as chancellor Philip Hammond admitted that there may be further austerity cuts if the UK crashes out of the EU with no deal.
British negotiators are arguing that a mix of UK commitments to include “non-regression” clauses on EU standards and a commitment to sign up to state aid “level playing field” rules will mean British businesses cannot unfairly undercut EU firms on services.
The UK wants to sign up to a common rulebook of EU regulations for goods – which would tie it into European standards for physical exports – but exit the rest of the single market for services.
Michel Barnier, the EU’s chief negotiator, has rejected the Chequers plan – partly on the basis that he believes the UK proposal to sign up to only some single market rules would give it a competitive advantage. But counter-intuitively, the UK is arguing that this would not be the case.
UK officials familiar with the British negotiating position say there is already huge flexibility within the EU on service regulations and that the UK will not get an unfair advantage compared to European firms.
They are also arguing that because UK businesses selling services into the EU will have to follow the regulations of that country anyway there would be no way to undercut European businesses trading there.
Officials have also admitted that where services are covered by single market rules, firms actually tend to gain an advantage from being part of those rules because it allows them to sell into other countries – meaning the UK might actually lose out from not being in the single market.
Remainers and Brexiteers alike said the news showed Chequers would be a failure – though they suggested different resolutions.
Eurosceptic Tory MP Andrew Bridgen said: “This is an admission of what those of us who are against Chequers already know – it’s a bad deal for the UK.
“It shackles us to the EU as a captive market, a vassal state.
“It serves a key purpose for the EU – other countries will look at this and say well if the UK, with the size of its economy, can’t get any sort of advantage from leaving the EU then no one can.”
Labour MP Owen Smith, a supporter of the anti-Brexit Best for Britain campaign, said: “If the Chequers Deal offers no advantages for Britain, what on Earth is the point of pursuing it?
“This is just the latest revelation that even those negotiating the Brexit deal know that a soft Brexit offers no upsides, while a hard Brexit is a pure disaster.”
Brexit Secretary Dominic Raab travelled to Brussels on Thursday to meet with his counterpart Mr Barnier, though the pair made no public appearances or statements.
Ministers have said in recent weeks that the choice is now between accepting Chequers and a no-deal.
The deadline for Brexit talks is looming, with agreement on issues like Northern Ireland required by October for the withdrawal agreement. The UK has also said it wants the future relationship to be agreed in principle before the deadline – though the chance of a detailed agreement seems increasingly slim.
The UK is due to leave the EU on 29 March 2019 whether or not it has managed to negotiate a withdrawal agreement with the EU. Ministers have said they would not revoke or extend Article 50 to prevent a no-deal, and that they are making preparations for every possible eventuality.
The chancellor confirmed today that a no-deal Brexit would likely see spending “refocused” and lead to further austerity cuts to priority areas. The admission came after a Treasury minister was photographed going into Downing Street carrying documents revealing the secret codename for the no-deal Brexit preparations: Operation Yellowhammer.
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