European leaders have dismissed two planks of the UK government’s apparent Brexit strategy, ruling out a transitional arrangement bridging the gap between the Britain’s departure and a final UK-EU trade pact, and reportedly quashing hopes for an early reciprocal rights deal for EU citizens in the UK and British citizens in Europe.

The prime minister of Luxembourg, Xavier Bettel, said he would be opposed to the bloc giving Britain an interim deal to cover the transitional period between its exit from the EU at the end of article 50 talks and the signature of a comprehensive new free trade agreement, which could take as long as a decade to negotiate.

“What would interim mean?” Bettel told Agence France-Presse. “That we are going make a hybrid status now? Either you’re a member or you’re not a member of the European Union … There is no in-between status, there is no hybrid status between the two.”

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British businesses in particular have urged Theresa May to pursue a transitional deal to avoid a “cliff edge” that would leave them facing dramatically different trading and regulatory conditions should the two-year article 50 talks come to an end with no agreement reached on a long-term trade deal.

The prime minister told the CBI conference last week she was eager to ensure businesses knew with some certainty how things were going to go forward, prompting speculation that the government might be aiming to ask for an interim agreement.

But the Luxembourg prime minister, whose country – though small – is influential as one of the union’s six founding member states, rejected the idea. “We are not going to make a status of ‘a little bit member’ or ‘not completely’, ‘pending divorced’, ‘nearly divorced’,” he said.

Separately, May still hopes a rapid deal can be reached on reciprocal rights for EU citizens in the UK and British citizens on the continent, despite reports that the German chancellor, Angela Merkel, had refused in private discussions to address the issue.

Berlin was reported to have rejected a request by the prime minister to give an advance nod to arrangements that allowed British and EU citizens to keep their rights to live and work abroad, so that the issue could be settled early on in the article 50 negotiations.

A German government spokesman told the news website Politico that Merkel had made it clear there could be no exceptions to the EU’s “no negotiations without notification” position. He declined to comment specifically on the discussions between May and Merkel, which took place during Barack Obama’s visit to the German capital.

Facebook Twitter Pinterest Angela Merkel addresses a news conference after talks with Malta’s prime minister in Berlin. Photograph: Hannibal Hanschke/Reuters

Responding to reports that May had requested an informal agreement with Merkel earlier this month over Britons living in the EU and EU citizens living in Britain, a spokesman for the German government said: “We categorically do not report or comment on the German chancellor’s internal discussions.”



But when asked about the alleged agreement at a press conference with Joseph Muscat, the prime minister of Malta who was visiting Berlin on Tuesday, Merkel said she was only prepared to negotiate with the other 26 EU members. “We spoke to each other and were united as the 27, that it is in our interests to negotiate together. I also made this clear once again in my discussion with the British prime minister – first article 50, then the common principles of the European council and then the negotiations appertaining to that – and I have no reason to doubt that this strategy that we’ve agreed on will be followed.”



A No 10 spokesman refused to deny the issue had been raised and rejected, but said May was still pushing for an early understanding that would result in EU citizens already in Britain being given the right to remain in the UK and more than 1 million Britons living across the EU member states being given the same rights.

“Negotiations can’t start until we trigger article 50 next year, but there is dialogue between the prime minister and world leaders as you’ve seen,” the prime minister’s spokesman said. “We would like to come to an early resolution surrounding the rights of residency of EU citizens.”

No 10 said May “would guarantee the rights of European citizens living in this country”, adding: “But of course we need to see that extended to British citizens living in the other 27 member states.”

The spokesman refused to get into any details of the meeting between May and Merkel but denied there was a lack of goodwill on either side. “We have been very clear we’ll go into the negotiations in the spirit of goodwill, we have as you saw yesterday with the Polish delegation, we are maintaining excellent relations with states in the EU,” he said.

May also sought to distance No 10 from the notes carried by an aide to the Conservative vice-chair, Mark Field, photographed outside Downing Street, which appeared to say Britain would not be able to stay in the single market and would not seek a transitional deal after leaving the EU.

Facebook Twitter Pinterest The notes carried by an aide were photographed outside Downing Street. Photograph: Steve Back/Barcroft Images

The notes said: “What’s the model? Have cake and eat it” and cites an ideal arrangement as “Canada-plus”, referring to the free trade deal hammered out over seven years with Ottawa.

“They want to have their cake, eat it, and get a smile from the baker, but not the other things,” Bettel said on Monday evening in his office in Luxembourg. “There are European values which cannot be separated. No cherrypicking.”

Asked whether May was concerned that the EU’s negotiating team under Michel Barnier might be “too French”, after the memo suggested that France was likely to be the “most difficult” country to deal with, a Downing Street spokesman said: “No. The composition of the EU negotiating team is a matter for them.”

Ministers had neither discussed the note at cabinet on Tuesday nor been given any additional advice on securing their documents, he said.

Officials in Brussels played down the significance of the handwritten note, saying they did not see it as official British policy. One source said it was normal that governments started with a maximalist scenario when embarking on any negotiation.

But he added: “Do they really think they can get this? That for the UK is the worrying part.” Some British politicians had shown an “absurd lack of knowledge” about how the EU works, he said, referring to statements by David Davis, before he became Brexit minister, that Britain could sign trade deals with Germany – legally impossible under EU law.

To “have your cake and eat it” (or “avoir le beurre et l’argent du beurre” in French), has become a familiar reference in Brexit talks, ever since Boris Johnson popularised it during the leave campaign as his preferred strategy. In a barb aimed at the foreign minister, Donald Tusk, the European council president, criticised proponents of the “cake philosophy”. Speaking last month, he said it was pure illusion for anyone to think they could have the EU cake and eat it. “To all who believe in it, I propose a simple experiment. Buy a cake, eat it, and see if it is still there on the plate.”