U.K. Prime Minister Theresa May | Sebastien Courdji/AFP via Getty Images Brussels: May’s Brexit plan would save UK business billions EU negotiators proposed boycotting the talks if the UK presented the Chequers Brexit plan.

The U.K.'s proposal to free itself from Brussels regulations on services would save British businesses billions of pounds a year, according to a briefing for EU27 diplomats by Michel Barnier's negotiating team.

The services proposal is a key plank of Theresa May's Brexit plan that was agreed by ministers at her Chequers country residence last month and resulted in the resignations of her foreign and Brexit secretaries.

Under the plan, the U.K. would agree on an "association agreement" with the EU including a "free-trade area" for goods, but it would no longer be bound by EU regulations on services that aim to create a level playing field between businesses in different countries.

The EU's chief negotiator made clear his aversion to the U.K. proposal in an op-ed published earlier this month, arguing that it would "undermine" the EU's single market. But in a closed briefing for EU27 diplomats in Brussels a day before the Chequers meeting and before the full plan was formally presented as a white paper, Barnier's team laid out their objections to what they expected from the British scheme in far more detail.

“Potentially there are dozens of regulations applied to services that could be affected" — Stephen Booth

The Commission quoted an internal study, which estimated that if the U.K. is freed from just seven unspecified EU regulations, it would provide savings for British businesses of €6 billion a year, according to two EU officials.

Although that figure is dwarfed by the turnover of the U.K. services sector — which makes up 79 percent of the country's GDP — the savings for U.K. firms would potentially be much higher if they are released from the full spectrum of Brussels regulations on services. “Potentially there are dozens of regulations applied to services that could be affected,” said Stephen Booth, director of policy and research at the Open Europe think tank.

Barnier's team also observed at the meeting that the Chequers plan would achieve much of what David Cameron was seeking, but failed to achieve, in his renegotiation of Britain's EU membership as prime minister ahead of the Brexit referendum.

A nonstarter?

The July 5 meeting was a regular session of the Council's Ad Hoc Working Party on Article 50 — a forum at which officials from national governments discuss the progress of the Brexit talks and are briefed by Barnier's team. According to four officials present at the meeting, the Commission offered a very negative assessment of the Chequers proposal.

Barnier's team was adamant that if Britain formally put forward the plan then it should boycott the talks altogether, according to two officials. A third official said that the Commission representatives objected to the U.K. proposals, but in less dramatic terms.

The representatives of Denmark, Germany, France, Austria, Ireland, Belgium, Hungary, Italy and the Netherlands agreed that the U.K.'s proposal was "a nonstarter.” But the Dutch, supported by the Belgians and the Hungarians, also said they were content to see how Britain delivered the message, said one of the officials. They convinced the Commission representatives not to give May's plan an all-out hostile reception.

The July 5 meeting has already gained notoriety following speculation in the Telegraph that the U.K. had been able to bug the proceedings and then persuade the Commission not to publish the slides in which it rubbished May's Chequers plan.

In those slides, the Commission pointed out that of the costs imposed on chemicals manufacturers by regulations, 30 percent stem from the EU's so-called REACH regulations and 70 percent stem from "level-playing field" rules such as those on industrial emissions. If the U.K. no longer has to follow those regulations, its chemicals industry would have what the Commission regards as an unfair competitive advantage. A similar problem would apply to the so-called embedded services, which form a large part of the costs of certain goods like cars. “The Commission said there would be a 20 to 40 percent impact on the cost of goods” coming from Britain, including cars, said one of the officials.

Separately, during the July 5 meeting the Commission provided an estimate of the cost for London to continue having access to an EU judicial database called Sirene which, among other things, allows alerts on persons wanted for arrest to be validated. Continued access to this database would cost a one-off fee of €400,000, plus €6,000 for monthly maintenance. This fee would not be for future access, but for ongoing cases at the moment of withdrawal, a Brexit official explained.

“No one wants to open an infringement [against London] 20 years after Brexit, it would have no sense" — Brexit official

This limited access to databases was discussed by Brexit negotiators during the most recent round of talks last week but the two sides remain far apart, said one of the officials. “The Commission reminded its position that if the U.K wanted to continue having partial access to the databases it had to pay for their modification and maintenance,” said the official. "[But] at this stage, the British side argues that it doesn’t have to pay because it needs the relevant information for the efficient completion of the cases that are still ongoing. It's an issue that will be decided at political level.”

Another delicate topic discussed in the same meeting is how EU procedures such as infringement cases against London for alleged violation of EU regulations pre-Brexit will be handled after the U.K. leaves. The Commission's line is that it should be possible, after the U.K. leaves, for EU authorities to open cases on infringements, new state-aid cases and anti-fraud procedures that happen before Brexit.

The two sides disagree on the cutoff for such cases. “No one wants to open an infringement [against London] 20 years after Brexit, it would have no sense,” said one of the officials.