Theresa May’s hopes of negotiating a “deep and special” trading relationship with the EU have been dealt a fresh blow by leaked documents which emphasise that only a basic free trade deal similar to that struck with Canada will be offered.



An internal discussion paper prepared by the European commission spells out how the British government’s rejection of membership of the single market and the customs union leaves the member states with little wriggle room in trade talks.

The document, leaked to the Politico website, was put together by the EU’s negotiating team to aid a “preparatory discussion” on the “framework for the future relationship”.

The paper states that “single market arrangements in certain areas” or the “evolution of our regulatory frameworks” could not be managed within the EU body of law as it stands and therefore the UK would have to be satisfied with a “standard FTA”.

The publication of the leaked document comes ahead of a bilateral meeting between May and the president of the European council, Donald Tusk, on the margins of an EU leaders’ summit in Gothenburg on Friday. Tusk will ask the prime minister to explain how the British government intends to move the negotiations forward, to allow the widening of the talks at the European council summit in a month’s time.

He will warn the prime minister that she cannot take for granted that the other 27 member states will rule that there has been “sufficient progress” on citizens rights, the Irish border and the divorce bill, at the European council meeting on 14 and 15 December.

The Guardian has further learned that the 27 member states have sought a legal opinion from the European commission on a possible extension of the two years allowed for talks under article 50 of the Lisbon treaty.

The member states do not envision a lengthy extension of the two years, however. One EU diplomat said: “We all have our own domestic political situations to deal with and so I can’t imagine us having unanimity on extending article 50. And this extension would only be if we are near striking a deal and need a few extra weeks or months.”

Senior diplomats attached to the member states said they had not yet seen the leaked paper produced by Barnier’s team but confirmed that the terms set out chimed with their understanding of the EU’s position that the red lines set out by May for a future deal also rule out special arrangements in particular sectors, including in financial services.

The documents explain that the UK’s insistence on “regulatory autonomy” and its intention to remove itself from the jurisdiction of the European court of justice mean it is “not compatible” as a partner within the EU framework.

Such a model would provide “no direct branching in sectors like financial services” and the documents add that there are only “limited EU commitments to allow cross-border provision of services”.

The paper will come as a blow to the UK, although the position has been voiced publicly by Barnier in the past.

In her Florence speech in September, May had insisted that the EU and the UK should raise their ambitions and that such a deal, similar to that struck with Canada, would not be good enough.

“Compared with what exists between Britain and the EU today, [a Canada-style arrangement] would nevertheless represent such a restriction on our mutual market access that it would benefit neither of our economies,” May said.

The EU-Canada deal slashes tariffs but trade in food is restricted by quotas and phytosanitary controls. There is also no additional access to the single market for financial services based in Canada.

One senior EU official said the British cabinet was still in “cuckoo land” if it believed the EU would offer anything more.

The EU is still waiting on an improved offer from Britain on its financial settlement, without which direct talks between the EU and the UK on a future deal will not begin.

A senior EU official warned on Thursday that it was up to the British government to move on the divorce issues in order to progress to the next stage of Brexit negotiations.

“We cannot be more clear than we have been,” the official said, adding that it was up to the UK to provide more information on how it intended to settle its EU budget obligations. Brexit negotiations would continue until the UK passed the EU’s sufficient progress test, the official said. “We would also like to see sufficient progress in December ... There is no back-up plan. The back-up plan if needed, is to go on negotiating.”

