Wednesday, 31 August 2016

Merkel Ally Says Post-Brexit U.K. Must Pay for Market Access

In World Economy News 31/08/2016

An ally of German Chancellor Angela Merkel said the U.K. will have to pay into the European Union’s budget if it wants the single market’s advantages, diminishing Britain’s prospects for a low-cost solution after its vote to exit the bloc.
Juergen Hardt, a lawmaker who speaks on foreign policy matters for Merkel’s Christian Democrat-led parliamentary caucus, cited the case of Norway, a non-EU nation that contributes to the bloc’s finances in return for market access. The issue wasn’t adequately addressed in the U.K.’s campaign leading up to the Brexit referendum in June, he said.
“If someone wants to benefit from the European Union single-market structures, he also has to contribute to the cost of that operation,” Hardt said in an interview in Berlin. “In Britain, before the referendum, nobody talked about that fact.”
Merkel and others in her government have repeatedly warned that Germany won’t let U.K. Prime Minister Theresa May pick and choose the EU’s benefits once she triggers the exit clause and talks on a new relationship begin. German Foreign Minister Frank-Walter Steinmeier joined Hardt in saying that the EU’s benefits come at a cost.
“The U.K. can’t rid itself of the duties of an EU member and at the same time keep the rights of an EU member,” Steinmeier said Tuesday at an event in Berlin. “We have to talk about this with great clarity on both sides of the English Channel.”
Hardt said in the interview that Britain shouldn’t expect special treatment on a halt to immigration.
“There’s no possibility to, for example, abridge the free movement of employees but to keep all the other freedoms” that EU members share within the single market, Hardt, 53, said on Monday.
Losing access to the EU’s single market is a threat to the U.K.’s financial industry, which would be deprived of so-called passporting rights that allow them direct access to clients in the EU. That makes the future of financial services a key part of the negotiations.
Upcoming Summits

Merkel is seeking to steer diplomacy ahead of the first EU summit without Britain on Sept. 16 in Bratislava, Slovakia. Brexit’s impact will also be discussed this coming weekend at the Group of 20 meeting in China, a German government official said on Tuesday.
Greater cooperation on security and economic policy are among the topics for the Bratislava gathering, while differences over Europe’s biggest refugee crisis since World War II remain unresolved. With EU members such as Poland and Hungary rejecting a quota system for resettlement, leaders are likely to fall short of a permanent solution, Hardt said.
“I don’t expect a breakthrough of the refugee question,” he said. While a quota system would be the “gold standard,” EU countries are more likely to consider a system that includes a voluntary cooperation for reluctant states, he said.
Citizens first need to start “trusting” the EU again, Hardt said. “Then we have to think about the new structures, and then we have to think about the negotiations with the British people.”

Source: Bloomberg