Brexit: Theresa May's new customs plan 'dead on arrival' in EU

Exclusive: Senior EU figures say there cannot be a single market for goods and not services

Theresa May’s new plan for future relations with the EU will be “dead on arrival”, senior figures in Brussels have told The Independent.

EU officials said any hint that the UK wants to be part of the single market on goods, but not services will be rejected.

It is a blow for the prime minister who has spent the last week in meetings with EU leaders, including Angela Merkel, in a bid to prevent Europe dismissing her plans out of hand when they are published next week.

Ms May is expected to push her cabinet to agree to a plan at Chequers on Friday, which would see Britain remaining in full regulatory alignment with the EU on goods, but not on services.

The meeting has also been preceded by threats and warnings from the Brexiteer wing of the Conservatives that the proposals mooted by the prime minister will not be accepted by them in the UK because they keep Britain too closely tied to the EU’s rules and regulations.

But before her ministers have even agreed to the deal, EU officials told The Independent the white paper would be “dead on arrival” in Brussels if, as expected, it proposes that the UK remain in the EU’s single market for goods, but not services.

They claimed they had repeatedly warned UK negotiators that this option would not work. They said it had been widely discussed among EU ministers and rejected – including, crucially, by the EU’s two most powerful players, France and Germany.

One Brussels source said: “We have been telling the UK for two years that we would not accept a single market a la carte.

“What do they come with? – A single market a la carte.”

We have been telling the UK for two years that we would not accept a single market a la carte

Senior EU source

Downing Street has tried to argue that Ms May’s plan is a “best of both worlds” blend of the customs partnership and “max fac” options, that she had previously proposed.

It would see most importers pay UK tariffs on imported goods, but about 4 per cent would pay EU tariffs if the finished goods were then re-exported on to the continent. Technology would be used to track goods to see which stayed and which travelled on, leading to claims of complexity and a risk of smuggling.

Britain would maintain “full regulatory alignment” on goods to reduce border checks and solve the Irish problem, but divergence would be allowed on the bigger services sector.

No 10 claimed this would allow the UK to strike deals with other countries in which it lowered tariffs on goods to gain access for its service sector, but Brexiteers have already argued that being able to set rules is critical to the UK’s future.

Brexit secretary David Davis is said to have written to Ms May, arguing that her new plan to reconcile warring factions over customs arrangements would be rejected out of hand by the EU.

Meanwhile, 46 Conservative MPs, including a string of former cabinet ministers, signed a letter yesterday urging the prime minister to keep business concerns in her mind over the next few days – with the private sector warning against anything that obstructs trade with Europe.

Guy Verhofstadt, European Parliament Brexit co-ordinator, said it was time for the PM to “put her country before domestic party political infighting – the time for fudges, fantasies and attempted renegotiations is over”.

European Council president Donald Tusk has said the promised white paper on customs must bring “clarity, realism and impetus to these negotiations”.

Ex-Treasury permanent secretary Lord Macpherson said: “If a ‘facilitated customs arrangement’ is the best HMG can do after two years, I begin to wonder whether a deal can be done.”